Can live without my DC pension pot but should I take the 25% tax free at the moment

NeverOutOfWork

We're fortunate that my missus and I both get a full state pension and I also have a modest DB pension which pays me enough each month to top up the state pensions so that we can live to our usual quiet standard pretty much unaffected by retirement. We have a nest egg in ISAs, no mortgage outstanding and no debt at all.

At the same time I have a DC pension in the background that we decided to leave alone as we didn't need to touch it. It's performance is not stellar but its there. I am wondering now if I should take the 25% tax free and would appreciate thoughts, my unrest is based on the UK currently and the poor state of the global situation.

Thank you for advice.

Marcon

NeverOutOfWork said:

We're fortunate that my missus and I both get a full state pension and I also have a modest DB pension which pays me enough each month to top up the state pensions so that we can live to our usual quiet standard pretty much unaffected by retirement. We have a nest egg in ISAs, no mortgage outstanding and no debt at all.

At the same time I have a DC pension in the background that we decided to leave alone as we didn't need to touch it. It's performance is not stellar but its there. I am wondering now if I should take the 25% tax free and would appreciate thoughts, my unrest is based on the UK currently and the poor state of the global situation.

Thank you for advice.

Not clear what you would be trying to achieve by taking the 25% tax free cash, or what you'd do with it which might give a better return than leaving it where it is. Please could you clarify?

KeiserSoze

I'm inferring that you're worried that due to global shenanigans (e.g. tariffs) your DC pot will reduce and by taking out 25% tax free you mitigate that?

All depends on what you want the money for I suppose, and whether you want to leave an inheritance. Of course you could take the TF cash and put it into a savings account earning interest but trying to time the market is notoriously difficult. 

If I were in your position where you've already got enough to live on and not concerned with leaving a legacy and want a simple financial landscape, I'd take the TF and buy an annuity with the remainder. Your tax liability would increase a bit but you'd have more money on a day to day basis where you get to treat yourself, live a little more luxuriously and have a pot put for emergencies.

dunstonh

I am wondering now if I should take the 25% tax free and would appreciate thoughts, my unrest is based on the UK currently and the poor state of the global situation.

What would taking the 25% out achieve?

you haven't told us your asset makeup of your pension or ISAs and how that corresponds with your future needs.  Nor your ages.

Cobbler_tone

This may help your thought process. Good video.

https://www.youtube.com/watch?v=aalC1FXFFQQ

eastcorkram

What would not taking it acheive?

Linton

eastcorkram said:

What would not taking it acheive?

Less effort and the money would continue to be fully invested.  The reason the OP has stated for taking the money is given as  "my unrest is based on the UK currently and the poor state of the global situation".  Taking investment decisions on one's judgement of the global economy is unlikely to be beneficial in the long trerm. Unless you need the cash it is generally better to do nothing.

ali_bear

Keep it invested. Markets may go through periods of instability but they always recover. 

Albermarle

ali_bear said:

Keep it invested. Markets may go through periods of instability but they always recover. 

Also there is 'bad news' all the time and there always has been and always will be. Often it  has no effect on stock markets at all. Maybe a short term blip at worst.
Of course there are exceptions like Covid, but even there the markets were fully recovered in leas than a year.

eastcorkram

Linton said:

eastcorkram said:

What would not taking it acheive?

Less effort and the money would continue to be fully invested.  The reason the OP has stated for taking the money is given as  "my unrest is based on the UK currently and the poor state of the global situation".  Taking investment decisions on one's judgement of the global economy is unlikely to be beneficial in the long trerm. Unless you need the cash it is generally better to do nothing.

Although I understand what you're saying, but then it seems whenever the OP was to ask that question, now, next year, the year after, the answer is always, Don't take it. They've already said they're fine on state pension plus DB etc. 

So it's never going to get taken.

Don't get me wrong, I'm now retired, and I've not taken anything from my DC pension either. I'm not suggesting the OP should take it, but it does make you wonder what the point of it is. 

poseidon1

NeverOutOfWork said:

We're fortunate that my missus and I both get a full state pension and I also have a modest DB pension which pays me enough each month to top up the state pensions so that we can live to our usual quiet standard pretty much unaffected by retirement. We have a nest egg in ISAs, no mortgage outstanding and no debt at all.

At the same time I have a DC pension in the background that we decided to leave alone as we didn't need to touch it. It's performance is not stellar but its there. I am wondering now if I should take the 25% tax free and would appreciate thoughts, my unrest is based on the UK currently and the poor state of the global situation.

Thank you for advice.

Understand your sentiments. I am a few years older than you and the possibility for steep losses are felt more acutely when you have less time for recovery compared to people 15-20  years our junior.

In a previous post you indicate you only have around £80k in ISAs between you. I would be inclined to take your 25% TFC and fully fund both £20k ISAs in 2025/26 tax year which is just around the corner. Whether that be cash ,  S&S  or a bit of both, all depends on the extent of your pessimism. 

In my case ISA's have taken centre stage for investing and income generation, even more so now that I am a permanent higher rate tax payer.

As for your remaining SIPP, you need to be satisfied whether your current investment choices are likely to be disproportionately affected by the geopolitical events now concerning you, and if so perhaps look to switch some monies across to potentially less volatile sectors.