Keeping 2 pension pots in drawdown/ufpls

safe_hands2

Hi. 5 yrs away from retirement hopefully and starting to think about the mechanics of taking my pension. I have 2 pots with different providers, set up to bridge the income gap between 60 and 67. 

Would it be a pain to leave both pots and withdraw from them. Is it better to consolidate into one?

Dazed_and_C0nfused

safe_hands2 said:

Hi. 5 yrs away from retirement hopefully and starting to think about the mechanics of taking my pension. I have 2 pots with different providers, set up to bridge the income gap between 60 and 67. 

Would it be a pain to leave both pots and withdraw from them. Is it better to consolidate into one?

It is extra work for you.

And adds a small amount of complexity to your tax affairs.

Consolidation often makes sense but as ever the devil is in the detail and sometimes two separate pots will be preferable.

LHW99

Or empty one first, then use the other?

tacpot12

Two seperate pots is preferable in case on provider has an IT system problem. It's better to have half your income than none at all. I also have some cash savings that aren't help as part of my SIPP/ISA which are both with the same provider. 

As you have two already, I wouldn't combine them. 

safe_hands2

Thank you for your replies. I was thinking of emptying the pot on the platform with the slightly higher fees first. It's good to know that I'm not going to be making a complete headache for myself by doing that!

Albermarle

safe_hands2 said:

Thank you for your replies. I was thinking of emptying the pot on the platform with the slightly higher fees first. It's good to know that I'm not going to be making a complete headache for myself by doing that!

That would be better.
Even then if you take irregular payments of taxable income, it is is likely the wrong tax will be taken off and you will get a rebate/extra demand later.
If you take irregular payments from two pensions in he same tax year. Double trouble !

Shimrod

tacpot12 said:

Two seperate pots is preferable in case on provider has an IT system problem. It's better to have half your income than none at all. I also have some cash savings that aren't help as part of my SIPP/ISA which are both with the same provider. 

As you have two already, I wouldn't combine them. 

Surely you can maintain the same resilience by keeping a couple of months spend in your bank account/savings account? How often do banking and investment platforms have serious IT problems preventing access to money? I know there have been some high profile incidents recently with some banks, but they've lasted hours or a day or two at most.

ali_bear

I would say merge them. Doesn't have to be in either, it could be in a new scheme. Have a look at the different providers, what the features and fees are like. 

One good reason for not merging would be the small pots rule, if you can take advantage of that. But with some providers you can, apparently, split-off up to three small pots from a larger fund anyway. This is something I will be attempting soon. 

Albermarle

ali_bear said:

I would say merge them. Doesn't have to be in either, it could be in a new scheme. Have a look at the different providers, what the features and fees are like. 

One good reason for not merging would be the small pots rule, if you can take advantage of that. But with some providers you can, apparently, split-off up to three small pots from a larger fund anyway. This is something I will be attempting soon. 

Although some providers that IFA's use will do this, the only provider in the retail/D2C area is HL AFAIK.
Some providers have no facility for even one small pot withdrawal.

ali_bear

When you say no facility, do you mean they won't notify HMRC that it was taken under that small pots rule? Or do you mean they won't do the cheeky splitting-off for that purpose. 

QrizB

ali_bear said:

When you say no facility, do you mean they won't notify HMRC that it was taken under that small pots rule? Or do you mean they won't do the cheeky splitting-off for that purpose. 

There's a combination of both.

Some providers don't do "small pots" at all.

Others do support them, but won't split a pension to create one.