A few small pensions

QrizB

Re. taking them at 55, if there's nothing special about his current pensions then he'll get access to them at 55 but will then lose access from April 2028 until December 2029 when he reaches 57.

This will also be the case with any DC pension that he transfers them to.

In principle he could move them into his current workplace pension or his Vanguard pension.

SwitchWitch said:

Point taken. I was thinking we could re-invest but actually it would only be the 25% everything else will be taxed unless it comes under the 'small pot' rule.

Small pots still have 25% tax-free, 75% taxable. The only real benefitto your husband is that they don't trigger the MPAA.

SwitchWitch

dunstonh said:

Can I move the small pensions without loosing the option to cash them in at 55? (With a view to investing more in the SIPP). 

If he has a protected retirement age and the receiving scheme will accept the transfer of the protected retirement age, then yes he can.     Not all ceding or receiving schemes have a protected retirement age.   So, its something you would need to verify.

Remember that just because they can be accessed at 55 doesnt mean it is sensible to do so.

Is an 'unqualified right' something I should ask the hosting platforms about?

Both ceding and receiving schemes should be asked.

On the L&G platform he has
Asda Diversified Growth Bond 9k
L&G PMC cash3 4k
L&G PMC 2035-2040 Fund 3k

L&G don't have a platform.  So, this will likely be an auto-enrolment scheme or group scheme.
L&G can be a right pain when transferring to a SIPP.   They have a tiny white list and you need to be on guard with the investments you select.  Often it's worth picking non-ETF/IT/Shares and then switching funds once it is with the receiving scheme.  Otherwise they are one of the most awkward to transfer away from.

Thank you for that, I do take your point on not necessarily cashing them in, it was mainly to help us re-invest.

And again for pointing out that L&G is different to Aviva, they were both workplace pensions with L&G.

They all state 55 years online although the paperwork from Asda does mention 50 years old but I cant remember opting in to that, it was around 1995, so I need to check if there are any other age restrictions.

Are these funds worth sticking with or should we look to move them to another fund/platform?

Thank you in advance.

Marcon

When you say 're-invest' - are you aware of the rules against pension recycling, specifically designed to stop people (effectively) getting two lots of tax relief on the same money?

SwitchWitch

QrizB said:

Re. taking them at 55, if there's nothing special about his current pensions then he'll get access to them at 55 but will then lose access from April 2028 until December 2029 when he reaches 57.

This will also be the case with any DC pension that he transfers them to.

In principle he could move them into his current workplace pension or his Vanguard pension.

SwitchWitch said:

Point taken. I was thinking we could re-invest but actually it would only be the 25% everything else will be taxed unless it comes under the 'small pot' rule.

Small pots still have 25% tax-free, 75% taxable. The only real benefitto your husband is that they don't trigger the MPAA.

Oh! I presumed if they hit 55 before it was a given so I really ought to have an idea what we should be doing (if anything) ready for early 2028.

For the 'small pots' rule is it possible to take the 25% leaving the 75% still invested? And could he do the same with a couple of SIPPS?

SwitchWitch

QrizB said:

SwitchWitch said:

55 in Dec 2027 😬😀QrizB said:

eastcorkram said:

QrizB said:

How old is your husband now?

I can't help reading that as in, why can't he move his own pensions, rather than getting someone else to do it

I can see the humour 😄 but D&C has grasped the reason!

Ha! 55 in Dec 2027 😬😀

Does he have a "protected pension age" in any of his current schemes? Or an "unqualified right" to take them at age 55? If not, he can move and/or consolidate them without risking the loss of such protections or rights.

https://commonslibrary.parliament.uk/research-briefings/sn05847/

Looking at the link he should have an unqualified right. 
Thank you. 🙂

SwitchWitch

Marcon said:

When you say 're-invest' - are you aware of the rules against pension recycling, specifically designed to stop people (effectively) getting two lots of tax relief on the same money?

Thank you for the heads up! I guess we'll have to use it for holidays freeing up more of his earned income. 😇

Marcon

SwitchWitch said:

QrizB said:

Re. taking them at 55, if there's nothing special about his current pensions then he'll get access to them at 55 but will then lose access from April 2028 until December 2029 when he reaches 57.

This will also be the case with any DC pension that he transfers them to.

In principle he could move them into his current workplace pension or his Vanguard pension.

SwitchWitch said:

Point taken. I was thinking we could re-invest but actually it would only be the 25% everything else will be taxed unless it comes under the 'small pot' rule.

Small pots still have 25% tax-free, 75% taxable. The only real benefitto your husband is that they don't trigger the MPAA.

Oh! I presumed if they hit 55 before it was a given so I really ought to have an idea what we should be doing (if anything) ready for early 2028.

For the 'small pots' rule is it possible to take the 25% leaving the 75% still invested? And could he do the same with a couple of SIPPS?

No. The 'small pots' rule is absolutely specific: you have to take the entire pot in one go and it must be no more than £10K at the time you take it. You can take up to 3 small pots from 3 separate personal pension arrangements.

If he only wants to take the 25% tax free, and leave the other 75% invested, that's fine. You don't need to use the small pots route to avoid triggering the MPAA, because it is only triggered when you 'flexibly access' a DC scheme (which means taking any taxable cash - taking just the 25% tax free doesn't trigger it).

Have you considered a free appointment with PensionWise https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/book-a-free-pension-wise-appointment which might help you get a better grasp of the mumbo jumbo world known as pensions?

Alternatively, a careful read of the SIPP provider's website is likely to give you a lot of useful info.

prowla

I'd check whether they are performing; if they are small amounts then the running costs can eat into the value.

Marcon

prowla said:

I'd check whether they are performing; if they are small amounts then the running costs can eat into the value.

Given that 'running costs' are usually a %age of the fund value, it often makes little difference whether you have several smaller pots or one very large one (occasionally fees are 'tiered', but even so it makes sense to check exactly how things compare). The exception is older contracts where there may be fixed monthly fees or similar, but those are, be definition, becoming much less common.

Sarahspangles

SwitchWitch said:

For the 'small pots' rule is it possible to take the 25% leaving the 75% still invested? And could he do the same with a couple of SIPPS?

With small pots it’s ’all the pot’ you have to take.

For awareness any time you take the 25% tax free and leave 75% invested, you crystallise that 75% so it will all be taxed, including any investment growth, when you take it. So if you left it invested for a long time you could actually pay more tax overall.

If your OH is close enough to R day it could be worthwhile modelling each tax year. For a long time I had a mental model which assumed that as soon as I stopped working, all the income I required to live on had to come from pensions. Literally one month I would have a salary going in to the account and the next a pension. There may be a bigger picture.

I’m actually bridging until my main pensions start with a mix of SIPP and savings. My income from my SIPP will be UFPLS - you can take up to £16,760 tax free if you have no other earned income, by using your personal allowance +25% tax free. People like to point out that you shouldn’t let the tax tail wag the dog, but saving £2,514 tax certainly wags my tail. For the rest I’m drawing from my savings with the lowest return after tax on interest.