Cashing out a Pension?
Discussion
Odd one this but I literally know nothing so looking for some advice.
8-9 years ago I worked for a small engineering company, I'd been there 2 years and they offered a pension scheme for all staff through Scottish Life. Seemed like a good idea at the time and over the next 2 months I paid about £120 in or something before the company was bought out and I was made redundant. I'm not a terrible organised person and the details of the pension got lost in the shuffle of several moves.
Fast forward 8 years and I've had communication from Royal London regarding the pension that haven't been able to contact me about. They've sent me a statement saying it's now got a transfer value of £860.
I'm now a teacher and I pay into that scheme (and as I understand it that's a good scheme) but frankly I've no idea what do with this older pension?
I assume there's no way to liberate any of that money now which would be useful! The other option is probably adding it to my teachers pension but that seems a bit pointless?
Suggestions?
8-9 years ago I worked for a small engineering company, I'd been there 2 years and they offered a pension scheme for all staff through Scottish Life. Seemed like a good idea at the time and over the next 2 months I paid about £120 in or something before the company was bought out and I was made redundant. I'm not a terrible organised person and the details of the pension got lost in the shuffle of several moves.
Fast forward 8 years and I've had communication from Royal London regarding the pension that haven't been able to contact me about. They've sent me a statement saying it's now got a transfer value of £860.
I'm now a teacher and I pay into that scheme (and as I understand it that's a good scheme) but frankly I've no idea what do with this older pension?
I assume there's no way to liberate any of that money now which would be useful! The other option is probably adding it to my teachers pension but that seems a bit pointless?
Suggestions?
I've wondered about this. I worked for Siemens and paid 8 months into their pension before getting made redundant. I've since been paying into another pension but I get an annual statement for the Siemens one. I can't cash it in and I doubt it will amount to much. I've been told I can't even transfer it so it's just sitting there. I suppose come retirement time I'll do what CaptainSlow says and blow it on coke and hookers. Oh I mean a holiday.
CaptainSlow said:
Pots under a certain size can be fully cashed out tax free after your retirement. Maybe use it to pay for your first holiday when you retire.
So in 30 years I get an extra £800 quid? Seems faintly pointless, Christ I'd take half that now! No other options?
Edited by MiniMan64 on Wednesday 17th August 16:32
CaptainSlow said:
Pots under a certain size can be fully cashed out tax free after your retirement. Maybe use it to pay for your first holiday when you retire.
I assume you are thinking about triviality, but it's not inherently tax free.Only 25% is free from tax on payment, and 75% would be taxed at basic rate. The taxed element forms part of your annual income so it might be correct, a refund might be due or indeed more tax might be due.
You can (probably)
Leave it there and let it gain interest and use it when you retire. But it will be worth next to nothing and worth even less after inflation.
Ask if it can be transferred to your current pension. It will need to be sold so cash can be transferred and then reinvested in whatever your current pension is invested in. Youll lose money at each step of this, sell price, "admin" transfer costs, then purchase price of new pension.
Transfer it to a SIPP where you can manage it with any other funds you may want to add. Probably not a good idea if you admit yourself you are not very organised
Cash it in. Normally without penalty given the fact its a small amount. Spend/Save as you wish when it hits your bank account. However, this is normally possible within a set time period of when you opened it so may not be possible.
Leave it there and let it gain interest and use it when you retire. But it will be worth next to nothing and worth even less after inflation.
Ask if it can be transferred to your current pension. It will need to be sold so cash can be transferred and then reinvested in whatever your current pension is invested in. Youll lose money at each step of this, sell price, "admin" transfer costs, then purchase price of new pension.
Transfer it to a SIPP where you can manage it with any other funds you may want to add. Probably not a good idea if you admit yourself you are not very organised
Cash it in. Normally without penalty given the fact its a small amount. Spend/Save as you wish when it hits your bank account. However, this is normally possible within a set time period of when you opened it so may not be possible.
oldaudi said:
You can (probably)
Leave it there and let it gain interest and use it when you retire. But it will be worth next to nothing and worth even less after inflation.
It should be possible to beat inflation over the long term without taking significant risks!Leave it there and let it gain interest and use it when you retire. But it will be worth next to nothing and worth even less after inflation.
oldaudi said:
Ask if it can be transferred to your current pension.
He's currently in a DB scheme, so won't be able to transfer into this.Might be a related AVC scheme it can be transferred into?
oldaudi said:
It will need to be sold so cash can be transferred and then reinvested in whatever your current pension is invested in. Youll lose money at each step of this, sell price, "admin" transfer costs, then purchase price of new pension.
What the DB scheme is invested in is irrelevant!oldaudi said:
Transfer it to a SIPP where you can manage it with any other funds you may want to add. Probably not a good idea if you admit yourself you are not very organised
Makes no sense, given the small amount - fixed fees will destroy the value.oldaudi said:
Cash it in. Normally without penalty given the fact its a small amount. Spend/Save as you wish when it hits your bank account
Nonsense!!oldaudi said:
Cash it in. Normally without penalty given the fact its a small amount. Spend/Save as you wish when it hits your bank account. However, this is normally possible within a set time period of when you opened it so may not be possible.
That would be ideal but I thought not possible?MiniMan64 said:
Jockman said:
MiniMan64 said:
That would be ideal but I thought not possible?
It isn't.Looks like I've got a long 30 year wait for my precious £860.
I'll have definitely forgotten about it by then....
MiniMan64 said:
oldaudi said:
Cash it in. Normally without penalty given the fact its a small amount. Spend/Save as you wish when it hits your bank account. However, this is normally possible within a set time period of when you opened it so may not be possible.
That would be ideal but I thought not possible?As above, Purple Moonlight has given the OP the advice they need!
Edited by sidicks on Wednesday 17th August 18:55
I'd add that Trivial pot legislation is distinct to Stranded pot legislation. Stranded pots rules allow someone aged 55 or over to take a small pot of no more than £10,000 so long as it stops their rights under an occupational or personal pension such as yours. For personal pensions, three pots can be taken, with no limit to the number of occupational schemes that could be commuted in this way.
The trivial commutation rules allow someone age 55 or over with total pension rights of no more than £30,000 to take them as a lump sum, as said, subject to tax at your marginal rate. So.. if someone takes their stranded pots first and their remaining pension rights are then within £30,000, potentially rights of up to £60,000 could be taken (3 personal pension pots of £10,000 each and then £30,000 under trivial commutation).
There are benefits to fettling things for some people.. not everyone.
The trivial commutation rules allow someone age 55 or over with total pension rights of no more than £30,000 to take them as a lump sum, as said, subject to tax at your marginal rate. So.. if someone takes their stranded pots first and their remaining pension rights are then within £30,000, potentially rights of up to £60,000 could be taken (3 personal pension pots of £10,000 each and then £30,000 under trivial commutation).
There are benefits to fettling things for some people.. not everyone.
MiniMan64 said:
8-9 years ago I worked for a small engineering company, I'd been there 2 years and they offered a pension scheme for all staff through Scottish Life. I paid about £120 in or something....
Fast forward 8 years and I've had communication from Royal London regarding the pension that haven't been able to contact me about. They've sent me a statement saying it's now got a transfer value of £860.
Fast forward 8 years and I've had communication from Royal London regarding the pension that haven't been able to contact me about. They've sent me a statement saying it's now got a transfer value of £860.
MiniMan64 said:
So in 30 years I get an extra £800 quid? Seems faintly pointless, Christ I'd take half that now!
I sincerely hope you’re not a maths teacher!If your £120 has grown to £860 after 8 years....
How much will that have grown to after another 30 years?
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