Pension pot withdrawal

jamesyboy7471

I have taken early retirement, monthly pension of £1000,plus part-time job,earning 600 per month. I have Isas /investments totalling approximately £57,000.
Will not receive State pension till late 2026.
My issue is I have a small pension pot of £23,000,which will mature in December 2025,giving me either a lump sum of £5500 plus £1200 per year or no lump sum and a pension of £1600.
I am considering cashing in this pension, which after tax would give me somewhere in the region of £18,000 that I could invest.
Does anyone have any advice on what to do with the small pot,especially regarding tax implications. 
I live in Scotland. 
I would be grateful for any advice. 
Thanks

Marcon

jamesyboy7471 said:

I have taken early retirement, monthly pension of £1000,plus part-time job,earning 600 per month. I have Isas /investments totalling approximately £57,000.
Will not receive State pension till late 2026.
My issue is I have a small pension pot of £23,000,which will mature in December 2025,giving me either a lump sum of £5500 plus £1200 per year or no lump sum and a pension of £1600.
I am considering cashing in this pension, which after tax would give me somewhere in the region of £18,000 that I could invest.
Does anyone have any advice on what to do with the small pot,especially regarding tax implications. 
I live in Scotland. 
I would be grateful for any advice. 
Thanks

You say this is 'an issue', but I wonder why? If you have no need to take the whole lot as cash, and no idea what to do with the proceeds, surely the 'issue' would go away if you didn't do that. Modern pensions rarely 'mature' - have you checked to see what happens if you don't take it in December? One final thought - do you definitely have the option to take the lot as cash in any case?

Dazed_and_C0nfused

jamesyboy7471 said:

I have taken early retirement, monthly pension of £1000,plus part-time job,earning 600 per month. I have Isas /investments totalling approximately £57,000.
Will not receive State pension till late 2026.
My issue is I have a small pension pot of £23,000,which will mature in December 2025,giving me either a lump sum of £5500 plus £1200 per year or no lump sum and a pension of £1600.
I am considering cashing in this pension, which after tax would give me somewhere in the region of £18,000 that I could invest.
Does anyone have any advice on what to do with the small pot,especially regarding tax implications. 
I live in Scotland. 
I would be grateful for any advice. 
Thanks

Why not leave it in the pension invested 🤔.

Or is it a defined benefit pension?

dunstonh

My issue is I have a small pension pot of £23,000,which will mature in December 2025,giving me either a lump sum of £5500 plus £1200 per year or no lump sum and a pension of £1600.

If you are not yet at state pension age then that pension is not maturing.  Modern pensions don't mature and legacy pensions mature at 75.   You are possibly referring to the current selected retirement age but that is not the maturity age and can be changed.  (I have assumed a Defined contribution pension based on you giving us a pot value - that does not apply to a defined benefit scheme but sometimes people get that mixed up. So, that should be verified as well)

I am considering cashing in this pension, which after tax would give me somewhere in the region of £18,000 that I could invest.

That would be a bizarre thing to do.     Taking it out of a tax wrapper and paying tax only to put it into a different tax wrapper (or unwrapped) is not a good idea unless it is tax advantageous to do so. 

Pensions, ISAs, unwrapped investments and other wrappers can all share the same investment options.   So, your decision to voluntarily pay tax is very nice for the rest of us but completely pointless for you.

xylophone

My issue is I have a small pension pot of £23,000,which will mature in December 2025,giving me either a lump sum of £5500 plus £1200 per year or no lump sum and a pension of £1600.

Is this a Defined Benefit pension? Do you mean that you reach Scheme Normal Retirement Age in December?