Withdrawing from a very small pension pot early?

[KMR3997]

Hi all

As above really, I have a £700 pension pot from a job I had 4 years ago, only worked there a few months and completely forgot about this until today.

I have a couple of other pots that are larger and I'm keeping obv but as this one is so small is it possible to remove it or do I have to either leave it or pull it into another?
It's with legal and general if that makes any difference

Cheers

[bennno]

KMR3997 said:

Hi all

As above really, I have a £700 pension pot from a job I had 4 years ago, only worked there a few months and completely forgot about this until today.

I have a couple of other pots that are larger and I'm keeping obv but as this one is so small is it possible to remove it or do I have to either leave it or pull it into another?
It's with legal and general if that makes any difference

Cheers

Unless you are of pensionable age then your options are to leave it, move it, or consolidate it in to one of your other pensions.

[Somewhatfoolish]

If it's absolutely tiny I'd be inclined to keep it for a laugh. I have one where the projected payout is either £2 or 2p a year. Cause it's literally one month of minimal contribution that arose due to corporate shenanigans. I keep it for the fun of it.

BTW under current tax law it can be useful to have a couple of small (but not that tiny) pensions as they don't count towards the limit for some weird reason.

[Paul_77]

Move it into another scheme or forget about it! So many workplace pension schemes have ended up taking the absolute piss! Most pensioners die, eventually, and then the rest die too.

[mikeiow]

Somewhatfoolish said:

If it's absolutely tiny I'd be inclined to keep it for a laugh. I have one where the projected payout is either £2 or 2p a year. Cause it's literally one month of minimal contribution that arose due to corporate shenanigans. I keep it for the fun of it.

BTW under current tax law it can be useful to have a couple of small (but not that tiny) pensions as they don't count towards the limit for some weird reason.

Indeed….the “small pots” rule.
I’d probably move it to the you you are now paying into (assuming it has no ‘guarantees’), but otherwise leave it.

[Sport_Turismo_GTS]

Paul_77 said:

Move it into another scheme or forget about it! So many workplace pension schemes have ended up taking the absolute piss! Most pensioners die, eventually, and then the rest die too.

How have some workplace pension schemes ‘taken the absolute piss’?

[Simpo Two]

I paid into a company pension scheme (this was in the 80s). I worked for the company for a couple of years and paid in about £400. Then the 'opting out' thing happened so I thought I'd get my money back. Great; that was the pot emptied and I thought no more about it.

20+ years later I got a letter from a pension company... anyway, to cut along story short, over 35 years that 'nothing' had become £6.5K. So you might be surprised what time can do with £700.

[Venisonpie]

What's the benefit of the small pot rule, it looks like you're still subject to tax after the first 25%?

https://www.gov.uk/tax-on-pension/tax-free

[Zigster]

Two advantages that I can think of:
1) it doesn’t count towards the Lump Sump Allowance which could be a benefit if you have significant other pensions.
2) it doesn’t trigger the Money Purchase Annual Allowance so you can continue to pay up to £60k pa to a pension.

[craig1912]

Zigster said:

Two advantages that I can think of:
1) it doesn’t count towards the Lump Sump Allowance which could be a benefit if you have significant other pensions.
2) it doesn’t trigger the Money Purchase Annual Allowance so you can continue to pay up to £60k pa to a pension.

Yep, so anyone on max TFC can get another £7500 tax free by utilising the small pots

[Sport_Turismo_GTS]

Sport_Turismo_GTS said:

Paul_77 said:

Move it into another scheme or forget about it! So many workplace pension schemes have ended up taking the absolute piss! Most pensioners die, eventually, and then the rest die too.

How have some workplace pension schemes ‘taken the absolute piss’?

?

[RammyMP]

Simpo Two said:

I paid into a company pension scheme (this was in the 80s). I worked for the company for a couple of years and paid in about £400. Then the 'opting out' thing happened so I thought I'd get my money back. Great; that was the pot emptied and I thought no more about it.

20+ years later I got a letter from a pension company... anyway, to cut along story short, over 35 years that 'nothing' had become £6.5K. So you might be surprised what time can do with £700.

I’ve got one of those as well, it was worth less than £500 in the 90’s, now £7k the last time I checked. Probably less now due to Trumps antics!

[C69]

Small pension pots (£1,000 or less) will be automatically combined in future, if government plans come to fruition: https://www.moneysavingexpert.com/news/2025/04/gov...