Advice needed!
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KTM540



Joined: 24 Sep 2013
Posts: 1694
Location: Mudlands

PostPosted: Thu Nov 09, 2017 10:19 am    Post subject: Advice needed! Reply with quote

Hi chaps, anyone out there know a little more than bu@@er all about pensions like me ?? Embarassed

I was notified a couple of months back that I had a work pension I'd paid into for a number of years, and forgot about when I moved on Shocked .. it'll be a few years before I can touch it when I'm 55 (tho not many Embarassed ) .. and need a bit of advice in "layman's" terms .. rather than a load of shizzle that I don't understand Confused

The way I understand it, the options I'd be lookin at are:

1 - transfer it to my current pension (boring!)
2 - take 25% tax free, and transfer the remainder into my current pension (only slightly less boring)
3 - draw it all out and close the account, and decide what to do with it, savings account possibly (getting warmer)
4 - draw it all out and close the account, and treat ourselves to summut nice Very Happy

I know I could contact the company the pension is with, but I also know I'd end up with my head spinning and still thinkin "WTF was that all about"!!

Anyone know owt about this sorta stuff ?

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Gunner



Joined: 15 Apr 2007
Posts: 29282
Location: Under Whitestone-Cliffe on the Lake.

PostPosted: Thu Nov 09, 2017 9:10 pm    Post subject: Reply with quote

Depends on what sort of pension it is, but do NOT draw it all out. Shocked

If you draw it all out, you will only be tax exempt on the first 25%, after that you will be taxed at the normal earnings threshold on the remainder.

This means that you run the risk of being stung quite badly by HRMC.

If you are a basic rate tax payer at the moment, the remainder will be added to your annual income and if this takes you over the basic rate tax threshold then you will be liable for income tax at the the higher rate, 40%, on ALL earnings in that tax year.

THINK VERY CAREFULLY ABOUT WHAT YOU ARE GOING TO DO OR YOU WILL BE WELL OUT OF POCKET. Exclamation Exclamation Exclamation Exclamation Exclamation


Also, mull on this.

If you were to take the cash, it would be difficult to find an investment product that would match the pension income if you were to save it elsewhere.

Hope you understand this, I've tried to put it as simply as I can. Wink


My advice, take the minimum amount, tax free that you need to treat yourself to a few hard earned things, then transfer the rest to your existing pension to enable you to consider options such as retiring slightly earlier or reducing your current working hours and taking your pension earlier.

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KTM540



Joined: 24 Sep 2013
Posts: 1694
Location: Mudlands

PostPosted: Thu Nov 09, 2017 9:27 pm    Post subject: Reply with quote

Looks like sound advice there Gunny .. cheers pal Wink

I do currently have a pretty good local government pension at the mo, and I kinda thought that topping that up further would probably be the smart thing to do especially as reducing hours isn't really an option for my role.

Cheers again mate for the advice Wink

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Gunner



Joined: 15 Apr 2007
Posts: 29282
Location: Under Whitestone-Cliffe on the Lake.

PostPosted: Thu Nov 09, 2017 9:38 pm    Post subject: Reply with quote

No probs, Wink

Just don't rush in to anything.

HRMC expected to cream a certain amount from people taking pensions early and falling into the "TAX TRAP", I forget what the figure was, but the amount they creamed off was actually four times greater................... Shocked

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KTM540



Joined: 24 Sep 2013
Posts: 1694
Location: Mudlands

PostPosted: Fri Nov 10, 2017 9:56 pm    Post subject: Reply with quote

Shocked .. robbin bazza's Evil or Very Mad

I have a few years yet before I have to decide what to do, but to be fair to Prudential who its with, they have done all the work so far finding me after moving on and changing my career 17yrs ago!!, and considering I had forgot all about this pension Embarassed Laughing

As we said, I think it will be the 25% cash, and reinvest into my current pension at the mo I think Wink .. seems to be the right thing to do

Thanks again mate Wink

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