Private pension

Cobbler_tone

It is a bit like saying why do I want to earn £53k a year because I'll pay more tax than if I earn £50k....unless you have to work a lot harder for the £3k!

Blueallblueno9

Thanks for advice folks I think I was kinda over thinking things. 

Sarahspangles

Blueallblueno9 said:

I'm always going to loose the 21% no matter when I cash it in.
However the more it grows the greater amount that's going to be, hence my reason for asking. 

If you have a year when you’re not earning or receiving pension and therefore have unused personal allowance you can take money from a pension and pay 0% tax. Just mentioning this in case you’re in that position.

El_Torro

One thing to bear in mind is that the 4.5% you earn in a cash account is not guaranteed over the long term, or if it's a fixed term account it's only guaranteed for so long. Interest rates vary over time. 

The same is even more true for investments, which go up and down regularly. Over the long term a sensible investment in stocks & shares funds will beat cash savings though. 

As others have mentioned you can move your pension to a provider who doesn't charge as much. When you should cash it in depends on a lot of factors, including how much money you actually need today. Pensions are pretty much the most tax efficient way to fund your retirement so you shouldn't empty them just because you can.

QrizB

El_Torro said:
The same is even more true for investments, which go up and down regularly. Over the long term a sensible investment in stocks & shares funds will beat cash savings though.

The 4.12% that the OP's pension has gained with SL Investment Pathway option 4 in the past 12 months is pretty underwhelming, though. Per Standard Life, "It’s for people who plan to take all of their money in the next 5 years." I don't think the OP has said what his plans are for this pot?

For comparison, a 100% equity tracker like VWRL is up 21% in the same period ...

MEM62

Blueallblueno9 said:

dunstonh said:

However it cost 1% to manage it and if I cash it in that's another 21%.
I was wondering if I'd be better off cashing it in and putting it into an account I have that pays 4.5%.

You do realise that the charges on the savings account paying 4.5% are likely to be higher than 1% a year?   
One is explicit, the other is implicit.  i.e. one you are told what they are and the other you are not.

Tax is 21%

Are we to assume you are in Scotland?  If so, you should state as much as the majority of people in the UK are not paying 21%.

Yes I have an account I'm currently getting 4.5% but I don't know how to work out what's best I. E leave it or move it.? 

So, your pension is making over 5% a year after charges and you want to know if its better to draw the pension, lose 21% of its value in tax to pay it in a savings account that is paying 4.5% currently after charges (but expected to drop over the next few years)?

I'm always going to loose the 21% no matter when I cash it in.
 

But all the time you leave is there that additional 21% is also growing.  

bjorn_toby_wilde

Or withdraw and put in a stocks and shares ISA with a lower cost provider. Any growth could then be taken tax free whereas it will all be taxable in the pension wrapper now it’s crystallised.

Albermarle

QrizB said:

El_Torro said:
The same is even more true for investments, which go up and down regularly. Over the long term a sensible investment in stocks & shares funds will beat cash savings though.

The 4.12% that the OP's pension has gained with SL Investment Pathway option 4 in the past 12 months is pretty underwhelming, though. Per Standard Life, "It’s for people who plan to take all of their money in the next 5 years." I don't think the OP has said what his plans are for this pot?

For comparison, a 100% equity tracker like VWRL is up 21% in the same period ...

Perhaps even more importantly the 5 year return is abysmal at less than 6%.

Even a standard medium risk multi asset fund is up around 30% over the last 5 years.

Blueallblueno9

Sarahspangles said:

Blueallblueno9 said:

I'm always going to loose the 21% no matter when I cash it in.
However the more it grows the greater amount that's going to be, hence my reason for asking. 

If you have a year when you’re not earning or receiving pension and therefore have unused personal allowance you can take money from a pension and pay 0% tax. Just mentioning this in case you’re in that position.

I'm 59 but retired due to health reasons, I'm on benefits though so how would this work regarding your point. 

Sarahspangles

Blueallblueno9 said:

Sarahspangles said:

Blueallblueno9 said:

I'm always going to loose the 21% no matter when I cash it in.
However the more it grows the greater amount that's going to be, hence my reason for asking. 

If you have a year when you’re not earning or receiving pension and therefore have unused personal allowance you can take money from a pension and pay 0% tax. Just mentioning this in case you’re in that position.

I'm 59 but retired due to health reasons, I'm on benefits though so how would this work regarding your point. 

I think it would be worth you posting on the Benefits board. Definitely mention you’re in Scotland in case that affects benefits, as it does tax. I think that if you take money out of your pension before State pension age, it may affect your benefits. It can count as capital or income.

If you have to leave it in the pension until you reach State pension age, then you’re not likely to be able to take advantage of withdrawing any at 0% unless your State pension is lower than the personal allowance (currently £12570 in England).

It makes sense to get a State pension forecast if you haven’t already, to check you’re being credited with years you may need for the full State pension. If you’re not forecast to receive that then again the Benefits board is a good place to talk about what that means in terms of pension credit.