Old Pensions, Advice Please

CoolBeans22

Hi, I have 3 old pensions with a single provider that are connected and I am not allowed to separate or add to. I currently am looking to draw down about half the balance which obviously I am not allowed to do.

My query is, should I transfer all the funds to another pension and then draw down just what I need?

Or

Should I draw down the total funds and then pay the funds I don't currently need into the other pension fund.

I'm thinking a direct transfer may cost me less, am I correct?

I need access to the funds quite quickly to make my garden manageable for health reasons so any advice would be very gratefully received. Many thanks.

eskbanker

Not convinced that your second option is actually valid, unless the pensions are very small - how much is in them and how much are you earning?

Albermarle

Should I draw down the total funds and then pay the funds I don't currently need into the other pension fund.

If you draw down all the funds then most likely you will pay some tax on them. Then there are rules about paying money into pensions, you can not just add what you want. It depends on your earnings and the sums involved.

Normally it is quite easy to transfer pensions to a new provider, but I am not sure what this means.

I have 3 old pensions with a single provider that are connected

Can you expand on this ?

Marcon

Hi, I have 3 old pensions with a single provider that are connected and I am not allowed to separate or add to. I currently am looking to draw down about half the balance which obviously I am not allowed to do. 

What sort of pensions are they - defined benefit or defined contribution?

How are they connected?

On the basis of the minimal information provided, it isn't 'obvious' why you aren't allowed to drawdown about half the balance (assuming you are aged at least 55, or have a 'younger' protected pension age). Please could you expand?

My query is, should I transfer all the funds to another pension and then draw down just what I need? 

Or

Should I draw down the total funds and then pay the funds I don't currently need into the other pension fund. 

I'm thinking a direct transfer may cost me less, am I correct?

Unless you are required to take financial advice before transferring, then normally transferring pensions from one scheme to another shouldn't cost you anything.

If you drawdown all the funds from all 3 pensions, you:

• will almost certainly be saddled with a tax bill
• may not have sufficient earned income to pay any 'unneeded' funds into a pension
• could be caught by the recycling rules.

In short, transferring is the simplest solution - but if the transfer value exceeds £30,000 and you have 'safeguarded benefits' (broadly speaking, a defined benefit pension, or a defined contribution pension with a Guaranteed Annuity Rate) you are required to take regulated financial advice before you can transfer - and that isn't cheap.

UKTaxHelper

Option two has a sting in it. The moment you take taxable money out, what you can pay back into a pension drops to £10,000 a year, and it stays dropped. Taking only the tax free cash doesnt trigger that.

Notepad_Phil

https://forums.moneysavingexpert.com/discussion/comment/82104955#Comment_82104955

And that assumes you have enough earned income to even pay in that much. Many people can only pay £2880 into a pension, which then gets relief added to make it £3600.