New Pension Rules
- Thread starter Phil the Brit
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P5Nij
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This thread has just caught my interest as I turned 55 a couple of weeks ago and have been thinking about talking a cash sum from my pension pot for quite a while. My Mrs and I are in a pretty good position - no kids, the mortgage was paid off last year, we have no other debts and she is set to inherit a fair wedge at some point, so I've decided it's time to treat myself to a decent 'toy', I'm thinking somewhere around the £20k - £25k mark. To those who've already gone down this route, is it just a case of ringing them up and ask, or is it a complicated, lengthy process etc...?
I'll carry on working and contributing to my pot until I'm at least 60, the job itself is easy going, work is pretty secure and health wise I'm ok but I suppose you never know what's around the corner.
I'll carry on working and contributing to my pot until I'm at least 60, the job itself is easy going, work is pretty secure and health wise I'm ok but I suppose you never know what's around the corner.
Scaf
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When I cashed in one of mine it was really simple, did it all over the phone and then papers through the post to sign, returned them and the cash came a few days later.
In my case as I took the whole lot they deducted base rate interest (from the 75%) and I made good the rest when I completed my self assessment.
A bit too simple really which is why some people get ripped off.
In my case as I took the whole lot they deducted base rate interest (from the 75%) and I made good the rest when I completed my self assessment.
A bit too simple really which is why some people get ripped off.
Wattie
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Pretty straightforward as outlined, they’ll probably suggest you go through an IFA.
Wattie
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Interest rates are so diabolical that it’s virtually definitive that the annuity will die with you or your spouse before you’ve had reasonable money back from it.
Specialist rates are available for “conditions” but these are only marginally better to “tempt” as the co’s offering them know that the likelihood of survival /longevity is poor and therefore profit is good.
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hashluck
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Your biggest issue may be "I'll carry on working and contributing to my pot until I'm at least 60" as your contributions are severely restricted as soon as you draw down anything. Grab a leaflet or get some advice.
As a starting point for anyone who's totally in the dark, I can 100% recommend Pensionwise. Not sure what your chances are of getting a face to face appointment in the current climate, but the person I saw was extremely helpful. They're not pushing any specific agenda.
hashluck
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Indeed you should be able to get free advice
www.pensionwise.gov.uk
Your pension provider may well insist you do so before allowing you access to your pot
Pension Wise: free pension guidance | MoneyHelper
Pension Wise is a free and impartial government service that helps you understand the options for your pension pot. Get free pension guidance today.
www.pensionwise.gov.uk
Your pension provider may well insist you do so before allowing you access to your pot
Another thought - I've worked through the IFA route for many years regarding my pension, I don't have a final salary scheme just a money purchase scheme which has grown over the years. In terms of return, pre covid my IFA's were always talking of working to an expectation of 4-6% growth year on year. (mine has averaged just over 9% for last ten years). Simple calculation on that basis, a £1m pot of money will provide £40 -60k per year (gross). Not forgetting the £1m is essentially untouched if you are just living off of the return. The £1m can be chipped away at over your retirement years for whatever you want, of course the lower the £1m goes the less the 4-6% return would be. Yep, I know this is all pre covid thinking and it has obviously skewed the numbers, but in time post covid I'm sure after an immediate burst in the markets it will settle somewhere near that again. Please note, this is not advice or recommendation, just comment on my personal experience.
mjheathcote
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Just a general comment really I've never trusted any IFA.
From our first mortgage over 20 years ago when we where advised that we would be crazy to have a traditional repayment mortgage over an endowment, we went traditional, the fact that the adviser received £200 for the traditional compared to £2,000 for the endowment immediately sprung my suspicions.
Then with pensions 'we must transfer you onto this better product', again, they are after the % cut for doing so.
I don't know a poor IFA.
From our first mortgage over 20 years ago when we where advised that we would be crazy to have a traditional repayment mortgage over an endowment, we went traditional, the fact that the adviser received £200 for the traditional compared to £2,000 for the endowment immediately sprung my suspicions.
Then with pensions 'we must transfer you onto this better product', again, they are after the % cut for doing so.
I don't know a poor IFA.
You do have to choose carefully I agree. Although I do have the mindset that, if the IFA is getting wealthy by helping me get wealthier I'm ok with that....
They're still getting paid though, even if you're not getting any wealthier. I'd like to see a bit more risk being shouldered by the IFA personally
Eb
mjheathcote
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True! but if your IFA is not making it work for you, then find one that does. They are there. Sorry! not an IFA myself or in total support of them, but can only give my experience over the years. Maybe I've just been lucky.
Silvercat
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18 months ago I was lucky enough to have the opportunity to take VR from my old company after 31 years and at 57, I was also able to access my company pension to. I had the option of taking 25% out of my pension pot (which wasn't far short of the then LTA) but I decided not to and actually put a chunk of my redundancy money into the pot to boost the coffers even further. (I also get a guaranteed CPI linked increase every year.) Why you may ask did I opt to go down this route? Well it's all down to your attitude towards risk and importantly in my case, could I manage my pension investments as well as a multi billion pound company who employ people specifically to do this, fulltime. The pension fund is also 86% fully funded and the company just put another £400m into the pot to help close the gap. By 2025 the funding gap will be fully closed. So on balance I took the least risk option. I'm sure others would have taken all or some of the 25% and had a punt on the markets. Great to do when you're in your 50's and 60's but maybe not so great when you're in your 80's and rely on the returns to underpin part of your pension. So in a long winded way I guess I'm saying we all have different circumstances and issues to consider, so what works for one may not be suitable for another. Get an IFA ( I found 'Close Brothers' pretty good) and discuss the options specific to you, but my advice would be to think very hard before you strip out significant chunks of money from your pension pot.
PS. to generate an income of around £50k per year you need a pension pot of around £1m as a rule of thumb.
PS. to generate an income of around £50k per year you need a pension pot of around £1m as a rule of thumb.
I think a lot of this thread is confusing. If people are in defined benefit schemes which I think is what you are saying then I fully agree with not buying out as the index linking and spouse benefits are normally so attractive versus the buy out capital sum that staying put makes sense. Most schemes are much better funded than the regulator would suggest as the discount rate used to calculate liabilities is currently unrealistically low. You are fine....all IMHO.
Personally I would have taken the 25% tax free sum from a tax perspective as I expect this benefit to be withdrawn in time plus tax rates will rise to fund Covid and demographic change.
Silvercat
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Yes it's a defined benefit scheme based upon final salary. But like I said it all depends on your attitude to risk ultimately.
Wattie
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Some very good points made here.
I guess it all comes down to your perception of the future and to a certain degree, trust that the economic picture/legislative picture regarding pension rules etc will not deteriorate.
Personally as outlined I’ll be getting funds out- pronto.
Tax free cash is already on its way.
Returns? 4-6%pa, averaging 9% etc through professionally managed funds.
Dunno why you’d bother- that doesn’t sound like they are managing money very well to me.
I guess it all comes down to your perception of the future and to a certain degree, trust that the economic picture/legislative picture regarding pension rules etc will not deteriorate.
Personally as outlined I’ll be getting funds out- pronto.
Tax free cash is already on its way.
Returns? 4-6%pa, averaging 9% etc through professionally managed funds.
Dunno why you’d bother- that doesn’t sound like they are managing money very well to me.
Wattie
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By 2028......(if you’re less than 47), what’s to stop them making it 65, or 70......+ in future.
(it used to be 50!)
Women’s state pension age has gone from 60-65........
They can do wtf they like. And will.
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