Combine pensions to draw early
Discussion
I have two pensions schemes outside of my state pension. One of them is very small at just £25k. It's one that I had before self employment. In retirement, it's worth just £1100 per year. I've been considering cashing it in early (I'm 58) to throw towards building an orangery on my house, but I think it'd cost me £5-£6k in tax unless I draw just 25% of it. No point in that as the contribution to the build wouldn't be worth it. So, if I merge the small pension into the larger one, could I draw 25% off the then even larger pot, hence potentially releasing £25k without the tax bill?
Just take 25% tax free from each. So long as you stay below the £268k limit you’ll be fine.
I did check trivial commutation rules but it wouldn’t apply to you.
Merging pensions is neat and tidy but I’d get a transfer quotation before doing anything. Fees can sometimes lead you to leaving them separate.
I did check trivial commutation rules but it wouldn’t apply to you.
Merging pensions is neat and tidy but I’d get a transfer quotation before doing anything. Fees can sometimes lead you to leaving them separate.
Jockman said:
Just take 25% tax free from each. So long as you stay below the £268k limit you ll be fine.
I did check trivial commutation rules but it wouldn t apply to you.
Merging pensions is neat and tidy but I d get a transfer quotation before doing anything. Fees can sometimes lead you to leaving them separate.
Just on the trivial commutation rules - is that only in respect of pots less than £10k individually not exceeding £30k in the aggregate ?I did check trivial commutation rules but it wouldn t apply to you.
Merging pensions is neat and tidy but I d get a transfer quotation before doing anything. Fees can sometimes lead you to leaving them separate.
alscar said:
Just on the trivial commutation rules - is that only in respect of pots less than £10k individually not exceeding £30k in the aggregate ?
I’m not aware of the £10k stipulation but it does cover total pensions across the entire pensions spectrum up to £30k. FWIW it doesn’t trigger MPAA if that’s of any use to anyone.
Happy Jim said:
No need to merge them, just pull the tax free element out as required
Thats true, but if it was me I'd merge them anyway. When I was coming up to retirement I had 3 pension pots (2 company, 1 personal) so I just merged them into a single HL SIPP.
Makes the admin simpler.
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