Pensions

patsy2090

I have 3 pensions and still working no plans to retire just now.  One of my pensions was a final salary which I am would not touch as still high rate tax payer but sitting at 75k lump sum tax free and 12k per annum. 

I have another frozen pension as moved job under tupe scheme which has 29k and one current sitting at 92k which my employer contributes 10% too. They are both defined contributions.  Next year I will be adding £200 per month which my employer will match so roughly 16% in total in my pension. 

i am turning 55 soon, I have substantial upgrades needing done on my property and I would need to add to my mortgage to do it.  I was considering taking 25% from both my dc’s but not sure if this would be a foolish idea in future, this would then mean I do not have to add to my mortgage. 

I am not looking to have a huge pension as will be debt free in couple of years but would  like enough to have comfortable existence.  

At present sitting at 50k per annum combined with state pension if we take 25%.

I was wondering if this would have a detrimental effect long term or if I am on target. 

Would I also be able to merge both defined contributions, if I do take lump sums I am aware that if I take from larger one that it will be frozen.  Would I be able to merge 2 frozen into new pension that would be set up.

If I do it this way would I incur charges such as management fees.

sorry if I sound clueless, I have appointment with pensionwise but just wanted to have some idea going into this

Mark_d

I would transfer your frozen DC pension in to your current scheme (with £92k) as this would be more efficient.  Leave the final salary scheme separate - there are only downside if you were to combine it.

How/why are substantial upgrades necessary?  I don't understand why you'd need to add to your mortgage to do it?  With this change to your mortgage, can you be certain you'd be debt-free in two years?  If so, then perhaps it would make sense to delay the upgrade to your property.

I couldn't comment on whether you take the 25% tax free cash, without knowing your full financial situation.  Personally I don't intend to take the 25% tax free cash as a lump sum.  I minimise my costs and boost my savings/investments.  I will delay significant costs/moving house as long as possible.

400ixl

Transferring the frozen DC pension into the current one may not be more efficient, we don't know what the operating fees are for them. Could be the current one is higher and there could be transfer fees.

By taking the tax fee money now means you are taking it out of what would likely be a smaller pot than in the future. It will continue to grow and therefore 25% of that larger pot will be more. 

silvercar

I’ll move this to the pension board.

patsy2090

Mark_d said:

I would transfer your frozen DC pension in to your current scheme (with £92k) as this would be more efficient.  Leave the final salary scheme separate - there are only downside if you were to combine it.

How/why are substantial upgrades necessary?  I don't understand why you'd need to add to your mortgage to do it?  With this change to your mortgage, can you be certain you'd be debt-free in two years?  If so, then perhaps it would make sense to delay the upgrade to your property.

I couldn't comment on whether you take the 25% tax free cash, without knowing your full financial situation.  Personally I don't intend to take the 25% tax free cash as a lump sum.  I minimise my costs and boost my savings/investments.  I will delay significant costs/moving house as long as possible.

Thank you so much for replying.

  I need to make improvements to my existing property that cannot be put off unfortunately. I really wished they could but neglecting them has led to leaks etc and more damage. Due to caring issues our income dropped so more of a cash flow issue just now and I would prefer not to add to my mortgage.  I have a very small mortgage that has 3 years left to pay.    I have credit cards too which is the reason for cash flow issues again intention is for them to be gone soon as well. 

No intention of touching final salary scheme this combined with state pensions and small pension my partner has gives us annual retirement of 50k as a couple which according to advisor we briefly spoke to said we are on target especially with more years to invest into it. We are not planning early retirement maybe part time for myself after 63 to take me under high rate tax but that’s not set in stone. 

Hope I am making sense explaining this. 

patsy2090

400ixl said:

Transferring the frozen DC pension into the current one may not be more efficient, we don't know what the operating fees are for them. Could be the current one is higher and there could be transfer fees.

By taking the tax fee money now means you are taking it out of what would likely be a smaller pot than in the future. It will continue to grow and therefore 25% of that larger pot will be more. 

Thank you I will find out the transfer fees first.  I find this whole thing a minefield 

Dazed_and_C0nfused

patsy2090 said:

400ixl said:

Transferring the frozen DC pension into the current one may not be more efficient, we don't know what the operating fees are for them. Could be the current one is higher and there could be transfer fees.

By taking the tax fee money now means you are taking it out of what would likely be a smaller pot than in the future. It will continue to grow and therefore 25% of that larger pot will be more. 

Thank you I will find out the transfer fees first.  I find this whole thing a minefield 

It's quite possible there is no fee to transfer a DC pension from one provider to another.

patsy2090

Dazed_and_C0nfused said:

400ixl said:

Transferring the frozen DC pension into the current one may not be more efficient, we don't know what the operating fees are for them. Could be the current one is higher and there could be transfer fees.

By taking the tax fee money now means you are taking it out of what would likely be a smaller pot than in the future. It will continue to grow and therefore 25% of that larger pot will be more. 

Thank you I will find out the transfer fees first.  I find this whole thing a minefield 

It's quite possible there is no fee to transfer a DC pension from one provider to another.

I am hoping not I am still in same employment this was frozen as new co took over.  

bjorn_toby_wilde

Mark_d said:

I would transfer your frozen DC pension in to your current scheme (with £92k) as this would be more efficient.

How do we know that it will be more efficient without more information? The OP has only stated how much the pensions contain. We have no way of knowing what the charges are, what protected benefits there might be, whether there are any exit charges or what the pension investment mix is.

patsy2090

bjorn_toby_wilde said:

Mark_d said:

I would transfer your frozen DC pension in to your current scheme (with £92k) as this would be more efficient.

How do we know that it will be more efficient without more information? The OP has only stated how much the pensions contain. We have no way of knowing what the charges are, what protected benefits there might be, whether there are any exit charges or what the pension investment mix is.

Unfortunately I do not have any of the answers to that I am clueless to it all.  I have requested information in meantime 

ali_bear

I would wonder why you are so averse to extending your mortgage. There's a thing called credit, by which I mean good borrowing. You borrow money to pay for things you need now to improve your situation in the longer term. And a mortgage is usually the cheapest way to borrow money. In your case you can make plans to pay it off when your pensions mature.