non tax payer with pension options at 55 - advice needed please.

[Cheddarcheeseandsodabread]

Since 2009 I have not worked and have been a housewife. Since that time I have had no income at all.

When I reach 55 (couple of years time) I can access my employers pension and have 2 options:

1. Take 25% in tax-free cash and let the rest stay invested

1. Take 25% in tax-free cash and take the remaining 75% in cash which would be taxed as income.

If I opt for no2 the remaining 75% would be much less than the basic tax allowance of £12,500, so would I get it all tax-free?

Any advice welcome, thank you.

So the amount of the pension is very low?

If you took it all, would you then invest it in say an S&S ISA?
Are there really no other drawdown options - could it be transferred to a different provider so you get more drawdown options?

Do you need the money? Could you just leave it all invested?

Do you need it? If not I'd be inclined to leave it.

In a flexi draw down pension, you can take up to £12,500 in the tax year without paying any tax as long as that is all you earn that year.

www.pensionsadvisoryservice.org.uk

You'd have to transfer it to another provider to take it out at 55. As pp said, if you don't need it, leave it there. I wish I had!

I think you can reduce the tax free amount you take too. When I play about with online pension calculators I normally reduce that to 10%.

So if you need the money now, why don't you see what the lowest percentage you could take is, while still leaving you under the tax free limit for annual income. That's assuming you don't need a lump sum at the moment.

Thank you all very much for your replies.

I could leave it in place, but it is only gaining about £9 a year in interest - it really is a small pension and in real terms it is only worth about £4000.

I have 2 years to sort it, was just looking for some advice or ideas.

Guardsman18 That was my thought as well.

£9 a year in interest? I don't understand, it should be invested. Admittedly it will have plummeted recently but it may recover.

noting the small amount, give the pensions advice service a call. They will help you with options.

hope you have state pension eligibility too!