Retirement account withdrawal.
Discussion
I’ve got 78k in a cautious managed portfolio and 13k in a stocks and shares ISA.
It’s just sitting there as I’ve another source of income for a couple of years but instead of making money it’s lost £2k in the last year (admittedly this is including charges) it and am tempted to put it into a simple interest earning account or something like savings bonds where I’d at least get something guaranteed.
I’m retired with a couple of other smaller pensions.
Is there a tax implication to basically withdrawing the lot and reinvesting it into something which isn’t a ‘retirement account’?
Or has anyone any better ideas. As you can see I’m pretty clueless in this field.
Yes, you will pay emergency tax on the 75% taxable portion, potentially reclaimable.
In the pension it is free of IHT, and grows tax free. Once in a bank account is is potentially liable to 40% IHT
Cash interest rates won't be here forever.
Are you worried about the market falling further? You could always put it into a "cash type" fund in the short term, if not markets go up as well as down.
Leaving it in the pension, and withdrawing it over time, could potentially mean zero tax on exit, depends when state pension kicks in etc.
In the pension it is free of IHT, and grows tax free. Once in a bank account is is potentially liable to 40% IHT
Cash interest rates won't be here forever.
Are you worried about the market falling further? You could always put it into a "cash type" fund in the short term, if not markets go up as well as down.
Leaving it in the pension, and withdrawing it over time, could potentially mean zero tax on exit, depends when state pension kicks in etc.
Drawweight said:
I’ve got 78k in a cautious managed portfolio and 13k in a stocks and shares ISA.
It’s just sitting there as I’ve another source of income for a couple of years but instead of making money it’s lost £2k in the last year (admittedly this is including charges) it and am tempted to put it into a simple interest earning account or something like savings bonds where I’d at least get something guaranteed.
I’m retired with a couple of other smaller pensions.
Is there a tax implication to basically withdrawing the lot and reinvesting it into something which isn’t a ‘retirement account’?
Or has anyone any better ideas. As you can see I’m pretty clueless in this field.
I don’t see why would change the wrapper due to this? Surely just change what’s in the wrapper. If you want cash like returns, stick it in a short term money market fund. It’s just sitting there as I’ve another source of income for a couple of years but instead of making money it’s lost £2k in the last year (admittedly this is including charges) it and am tempted to put it into a simple interest earning account or something like savings bonds where I’d at least get something guaranteed.
I’m retired with a couple of other smaller pensions.
Is there a tax implication to basically withdrawing the lot and reinvesting it into something which isn’t a ‘retirement account’?
Or has anyone any better ideas. As you can see I’m pretty clueless in this field.
As for why it’s lost value over last 2 years, if in cautious managed funds it will have been bond fund heavy and so capital value scuppered by rising rates.
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hstewie said:
hstewie said: Do you invest directly with Omnis or do you use a platform like Hargreaves Lansdown?
Is it in any form of pension or is it just a general account?
It's a managed account by my IFA.Is it in any form of pension or is it just a general account?
The account with £78k is named 'Retirement Account' on the platform that I get my results from. All the funds in it were generated from various private pensions that I collected over the years.
The other £13k is a 'stocks and shares ISA'
OK you need to find out whether it's a pension or just a normal unwrapped investment account.
The way you've worded it makes it sound like it might be a pension but if you have access to the platform look around and check your documents for any reference to terms. like pension or SIPP or unwrapped or general investment account.
If it's a pension I don't know the answer to the "is there a tax implication to basically withdrawing the lot" question but check with your current provider what funds they offer as they may offer money market funds which are a reasonably simple way to get savings like returns that typically track the BoE base rate.
If it's a pension it should also be transferrable to a provider/platform where you can choose from the whole market of funds or even individual gilts whilst keeping it in the pension wrapper.
If it's a general unwrapped account it's even easier.
Basically the devil is in the detail and you haven't provided very much
The way you've worded it makes it sound like it might be a pension but if you have access to the platform look around and check your documents for any reference to terms. like pension or SIPP or unwrapped or general investment account.
If it's a pension I don't know the answer to the "is there a tax implication to basically withdrawing the lot" question but check with your current provider what funds they offer as they may offer money market funds which are a reasonably simple way to get savings like returns that typically track the BoE base rate.
If it's a pension it should also be transferrable to a provider/platform where you can choose from the whole market of funds or even individual gilts whilst keeping it in the pension wrapper.
If it's a general unwrapped account it's even easier.
Basically the devil is in the detail and you haven't provided very much
Drawweight said:
Is there a tax implication to basically withdrawing the lot and reinvesting it into something which isn’t a ‘retirement account’?
Isn't this the sort of thing that your IFA should be able to advise you on? Getting him / her to clarify whether or not the 'retirement account' is actually a pension (as opposed to a general investment account) would be worthwhile, too.
C69 said:
Isn't this the sort of thing that your IFA should be able to advise you on?
Getting him / her to clarify whether or not the 'retirement account' is actually a pension (as opposed to a general investment account) would be worthwhile, too.
Quite. Ask them to explain exactly what they've sold you, and keep asking until you get an answer you understand. Make him earn his money. Then post it here for checking. They like to keep it looking complicated so you don't understand.Getting him / her to clarify whether or not the 'retirement account' is actually a pension (as opposed to a general investment account) would be worthwhile, too.
A pension is a specific investment vehicle with benefits but also strings attached.
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