Can I take all of this pension ?
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spooncoot
Posts: 4 Newbie
I have a small frozen pension from when I contracted out of SERPS in approximately 1986.
The pension was taken out with Scottish Amicable, then went to Prudential, Friends Provident, and has ended up with Aviva.
Nothing has been paid into it for years, and I contracted back in about 8 or 9 years after contracting out.
The pension is worth approximately £21000. I am 55 in January, and have read that I can take 25% of it tax free.
However, I would like to take it all, if possible, as I would like to move house next year, and the lump sum would be more beneficial to me for this than the £8 per week it will bring me in retirement.
I still have enough national insurance credits for my state pension.
Is it possible to take all of this pension, as it's just sitting there and could really help me with my house move.
I'd be very grateful for any advice.
Thanks
The pension was taken out with Scottish Amicable, then went to Prudential, Friends Provident, and has ended up with Aviva.
Nothing has been paid into it for years, and I contracted back in about 8 or 9 years after contracting out.
The pension is worth approximately £21000. I am 55 in January, and have read that I can take 25% of it tax free.
However, I would like to take it all, if possible, as I would like to move house next year, and the lump sum would be more beneficial to me for this than the £8 per week it will bring me in retirement.
I still have enough national insurance credits for my state pension.
Is it possible to take all of this pension, as it's just sitting there and could really help me with my house move.
I'd be very grateful for any advice.
Thanks
0
Comments
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Yes you can take the 25% tax free. Now the issue is with the 75% that is taxable.
If you will earn circa £50,000 from wages than all the remaining 75% of the pension will be taxed at 40%.
If you have no earnings the first £12,500 of the taxable amount will also be tax free and you would pay 20% tax on the remaining taxable value in the pension.
Living outside Scotland and earing more than £0 but less than £50k in England etc the tax will be in the 20% to 40% region depending on your earnings.
Earnings if living in Scotland will be at the tax rates in Scotland.0 -
And will you wish to continue to contribute to a DC pension after taking the whole of the old pension?
https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance0 -
Have you actually checked your State Pension forecast on gov.uk and understood both what you have earned so far (to 05:04:2019) and what you will eventually end up with if you continue your expected working (contributing) pattern.
Remember the "35 years" rules don't apply to you.
Your £21,000 will become £15,632 after the pension company deduct tax from the taxable element. You may be due some of that tax back but equally could have extra to pay to HMRC. All depends on where you are resident for tax purposes and what other taxable income you have.0 -
The pension was taken out with Scottish Amicable, then went to Prudential, Friends Provident, and has ended up with Aviva.
Pru never sold their book to Friends provident. So, are you sure this is the same one? (unless you transferred it yourself at some point)However, I would like to take it all, if possible, as I would like to move house next year, and the lump sum would be more beneficial to me for this than the £8 per week it will bring me in retirement.
Actually, it would be closer to £20 per week assuming no growth at all in the next decade. in reality, more likely to be around £35 a weekIs it possible to take all of this pension, as it's just sitting there and could really help me with my house move.
Its not just sitting there. It is growing.0 -
And will you wish to continue to contribute to a DC pension after taking the whole of the old pension?
No I won't be contributing to another pension scheme.
I'm resident in the West Midlands, UK. My taxable income is about £20,000.Dazed_and_confused wrote: »Have you actually checked your State Pension forecast on gov.uk and understood both what you have earned so far (to 05:04:2019) and what you will eventually end up with if you continue your expected working (contributing) pattern.
Remember the "35 years" rules don't apply to you.
Your £21,000 will become £15,632 after the pension company deduct tax from the taxable element. You may be due some of that tax back but equally could have extra to pay to HMRC. All depends on where you are resident for tax purposes and what other taxable income you have.
I did look on the .GOV website and it said I would get £168 per week for my state pension.
I don't know what the 35 years rules are, sorry.Pru never sold their book to Friends provident. So, are you sure this is the same one? (unless you transferred it yourself at some point)
Maybe it was Friends Life ?
Actually, it would be closer to £20 per week assuming no growth at all in the next decade. in reality, more likely to be around £35 a week
Its not just sitting there. It is growing.
I do recall reading somewhere that it would pay about £8 a week, but can't remember where.
At least I can get 25% of it when I turn 55 then. Could have really done with all of it as I'm desperate to move.
Thanks for the replies0 -
[At least I can get 25% of it when I turn 55 then. Could have really done with all of it as I'm desperate to move.
Thanks for the replies
You can take all of it, you'll just have to pay 20% tax on it.
Once you take even £1 above the 25% tax free you can never contribute more than £4k into a pension again.0 -
AnotherJoe wrote: »You can take all of it, you'll just have to pay 20% tax on it.
Once you take even £1 above the 25% tax free you can never contribute more than £4k into a pension again.
You can't pay more than £4,000 per annum into a money purchase scheme. No limit to what you can pay if you have a lucky break and find employment with a defined benefit scheme, though.Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
I did look on the .GOV website and it said I would get £168 per week for my state pension.
I don't know what the 35 years rules are, sorry.
Not sure from this is you've been through the (short) online process of getting your own estimate rather than a bit of 'general' information? If you haven't yet done so, here's the link: https://www.gov.uk/check-state-pensionGoogling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
You could take the whole of the pension if you wish but need to remember that 75% is taxable as income in the year of receipt.
It is likely that the amount of tax that will be deducted on taking the whole of the pension will be incorrect - you would need to contact HMRC if so.
See
https://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/
With regard to your state pension, as another poster mentions, (9 above) have you actually obtained a state pension forecast?0 -
As Marcon says you are best checking this again.
Plenty of posters on here have seen the top line (£168.60) and assumed that will be what they get but you need to read past that to see how many more years (if any) you need to contribute to actually achieve the £168.60.
If you take the whole £21k then the pension company will initially deduct £5.3k tax from the taxable element but you will eventually get £2.2k of this back from HMRC.0
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