AIBU?
Pension pot.
NeaterBonita · 05/11/2018 08:29
I have under £10 000 in a pension that I took out in my late 20’s for a short period of time. I can’t add to it.
I am considering cashing it in. I really need the money at the moment and according to the last statement I would only get about £200 a year payout when I retire.
This seems very low I’d have to live quite a long time to make it worth hanging on to till I reach retirement.
LittleBookofCalm · 05/11/2018 08:31
if you need it now, then you need it,
how old are you now?
do you have another pension going?
BatsAreCool · 05/11/2018 08:34
I presume that £200 is if you took an annuity at retirement but there are other options now other than annuities.
Do you have other pensions that you could transfer that into?
Personally I wouldn't withdraw and spend it as I wished I had actually put more money into my pensions when I was younger but really I can't advise as everyone's financial situation is different.
JanetLovesJason · 05/11/2018 08:37
Been in similar position twice.
First time cashed it in to scrape together deposit to buy flat. Never regretted it (especially as terms of pension were changed just after recession and it became much less favorable).
Second time, I just couldn’t decide what to do and ended up doing nothing for ages. Then the original pension company sold a load of dormant pensions onto a third party company. When this happened they wrote to me about management options. I found a way to add to it til it was big enough to move into a stakeholder pension. I phoned and phoned people at the new pension company until someone took me seriously and gave me the bank details to transfer money in. Don’t regret that either, as I think it’ll eventually add up to something worthwhile, now it’s incorporated with other contributions.
Tatara1982 · 05/11/2018 15:40
Depends on your age. If you're under 55 you're likely to pay more than 50% tax if you cash it out...
tiggerkid · 05/11/2018 15:52
Bear in mind the tax implications. If you still think it's worth it, then by all means go ahead.
NeaterBonita · 06/11/2018 07:23
I’m 56.
The plan is due to mature in 2022. If I waited till then would I not have to pay tax on lump sum? Would I get both lump sum and an annual payout if I wait till retirement?
I do need money but I would prefer not to do something too stupid. I have an appointment lined up with pension wise.
Wideeyedandlegless · 06/11/2018 08:02
What I did (advice from a financial adviser) was transfer the pension from the company's scheme to a flexi draw down plan. Mine is low risk with Prudential.
I was able to then draw down 25% tax free immediately. I was on a low income so was then able to draw out money tax free provided I didn't go over £11,500.
Pensionwise weren't able to discuss my policy with me because of the type of pension it was?
The above advice cost me £2500 so hopefully it will help you!
Urbanbeetler · 06/11/2018 08:07
I think you can draw out 25% overall without paying tax. Do you need it for something specific, or is it just a feeling that it would be nicer to have a lump sum than a couple of hundred a year. You’d have to live a while after getting the pension to have the advantage of the entire amount before the end of your life at that rate!
NeaterBonita · 06/11/2018 19:46
My calculation , if I have understood it, is that I would have to wait over 40 years to make it worthwhile get the equivalent of £10000. I must be missing something.
Ted27 · 06/11/2018 20:13
I have a slighter larger pension pot which will never be added to, which will give me £400 a year. I'm a bit younger but will be cashing it as soon as I can.
It will be spent on a new roof and bathroom, anything left over will go on a holiday.
I have a small civil service pension which I get at 60, including a lump sum. If I cash this pension in I won't have to use that lump sum for major house repairs. I have another pension which I get at 65.
I can make much more benefit of the pension as a lump sum, rather than the £35 or so a month it will give me in 12 years time.
Urbanbeetler · 06/11/2018 20:41
Are you missing a lump sum? Many pensions give you an initial lump sum then a monthly amount. It doesn’t seem quite right that you’d only get £200.
Urbanbeetler · 06/11/2018 20:43
Actually just looked at mine and although the amounts are different, it’s also the monthly sum which would be around 40 years worth. There is a lump sum on retirement too.
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