Small pensions - any advice

peteuk

I will admit I don't know much about pensions, and up until now haven't needed to worry about them. 

Having left my main employment in 2021, I have had two employer pensions since. One with my current employer and one with a company I worked for 18 months. 

I am currently 52, and in receipt of a non-contributory pension (over £1K a month), this goes up at SPA (67), and I get another tax-free lump sum. 

I have checked my previous pension provider for the 18 months I was employed with them.  It currently has £3,190.86 in the pot and is estimated to be worth £4214 at retirement (65), which will give me a monthly pension of £23.00 per month or approx £280.00 a year. 

My current employee pension has a pot of £8,462.56 (last statement July 25), estimated at £45K at age 65, with a yearly payment of £3,180.00

I believe I can withdraw monies from this at the age of 55, a sum of which 25% is tax-free. Is this from both pots or combined?

Equally, I can transfer it to my current pension pot. I assume it would be better in the pot of my current employer. 

molerat

You can withdraw 25% of each individual pension, you cannot take more from one and less from another to balance the 25% overall.  You need to double check the age 55 as it is moving to 57 from April 2028.  It may be worth moving if the current scheme offers better conditions / charges.

Albermarle

peteuk said:

I will admit I don't know much about pensions, and up until now haven't needed to worry about them. 
You have come to the right place- spending some time reading this forum is a good way to learn.

Having left my main employment in 2021, I have had two employer pensions since. One with my current employer and one with a company I worked for 18 months. 

I am currently 52, and in receipt of a non-contributory pension (over £1K a month), this goes up at SPA (67), and I get another tax-free lump sum. I do not really understand this. Do you mean you mean you already are receiving a pension , or is £12Kpa its current value. Presume it is a Defined Benefit/Final salary type scheme?

I have checked my previous pension provider for the 18 months I was employed with them.  It currently has £3,190.86 in the pot and is estimated to be worth £4214 at retirement (65), which will give me a monthly pension of £23.00 per month or approx £280.00 a year. 

My current employee pension has a pot of £8,462.56 (last statement July 25), estimated at £45K at age 65, with a yearly payment of £3,180.00

I believe I can withdraw monies from this at the age of 55, a sum of which 25% is tax-free. Is this from both pots or combined? The age is going up to 57. dding m

You can withdraw separately or combine them first.
However if you withdraw them at 57, you will not be able to have them when you retire. Frankly these pots are rather small and you should probably thinking about adding 

more to them, rather than withdrawing them early.

Equally, I can transfer it to my current pension pot. I assume it would be better in the pot of my current employer. Not necessarily but probably makes it easier to deal with in future.

Some comments in bold.
When were you hoping to retire?

Brie

Albermarle said:

peteuk said:

I am currently 52, and in receipt of a non-contributory pension (over £1K a month), this goes up at SPA (67), and I get another tax-free lump sum. I do not really understand this. Do you mean you mean you already are receiving a pension , or is £12Kpa its current value. Presume it is a Defined Benefit/Final salary type scheme?

This confused me too until I remembered someone else who was receiving a pension earlier than normal and it turned out to be military based.  Perhaps this is the same?

peteuk

Brie said:

Albermarle said:

peteuk said:

I am currently 52, and in receipt of a non-contributory pension (over £1K a month), this goes up at SPA (67), and I get another tax-free lump sum. I do not really understand this. Do you mean you mean you already are receiving a pension , or is £12Kpa its current value. Presume it is a Defined Benefit/Final salary type scheme?

This confused me too until I remembered someone else who was receiving a pension earlier than normal and it turned out to be military based.  Perhaps this is the same?

Totally correct Brie -  after 24 years Service I was afforded the plasure of a tax free lump sum and an immidaite pension which pays me a monthly amount of just over £1k. 

At SPA I can choose to take a slight reduction in the increase for another tax free lump sum.   

So currently at 65 I will get the two "new" pensions along with my current one and then at 67 (currently) I can expect my Military Pensiion to inncrease and my State Pensionn. 

Yorkie1

Is there any merit in keeping any of the small pots as they are, and taking them under the "small pots" regime? (I know nothing about this really).

peteuk

• Age Requirement: You must be at least 55 years old (rising to 57 in April 2028), or meet ill-health or protected pension age conditions.

Of course, I turn 55 in Jul 2028.  Seems if I do want to take a lump sum, I need to wait another 2 yrs.

Marcon

Yorkie1 said:

Is there any merit in keeping any of the small pots as they are, and taking them under the "small pots" regime? (I know nothing about this really).

There's nothing magic about the small pots regime unless you want to avoid triggering the Money Purchase Annual Allowance and/or (slightly) increase the amount of tax free cash you can take if you have already reached the maximum Lump Sum Allowance of £268,275.

More info: https://www.litrg.org.uk/pensions/pension-withdrawals/small-pensions

OP - what happened to the other small pensions you asked about in 2024: https://forums.moneysavingexpert.com/discussion/6549712/aged-51-five-pensions-and-not-sure-what-to-do#latest 

peteuk

@Marcon totally forget about that post. 

Pension 1 - took out at 22 has about 6 months payments in it, stopped because at due to a change of employment I couldnt have a private pension. - Will Check on this balance

Pension 2 - currently paying me £12K a year, this will remain until 55 where it increases by CPI

Pension 3 - provider unknown - six months of employer pension - Not sure if this got 6 months payments, no info on this. 

Pension 4 - Provider know - 18 months of employee pension Is the one mentioned in this thread £3,190.86 in the pot and is estimated to be worth £4214 at retirement (65),

Pension 5 - Current employee pension, 18 months and continuing. Still in employment £8,462.56 (last statement July 25), estimated at £45K at age 65, with a yearly payment of £3,180.00

peteuk

More confusions to be added to the mess of my pensions. 

Pension 1 - Opened Apr 92 transfer of NI contributions - current pot £12,100
Pension 2 - Opened Aug 92. last payment Oct 96 - current pot £8400
Pension 3 - Non contributed, started paying monthly £1K - due a second tax free lump sum on SPA £27K.  Also increass at age 55. 
Pension 4 - No info but im not expecting this is still accessable (Edit No pension - didnt pay in until passed probation and I left shortly after)
Pension 5  £3,190.86 in the pot and is estimated to be worth £4214 at retirement (65),
Pension 6 -  Still in employment £8,462.56 (last statement July 25), estimated at £45K at age 65, with a yearly payment of £3,180.00

Thanks for all your help both on this thread and the one I forgot about previously. 

Will try and seek some professional advice. 

Edit No 2 - Having been advised yesterday that I had no pension for the 6 months employment (Pension 4) it now transpires I have a pot of £1,831.00