Pension pot query

[uk66fastback]

Hi all, my mate and I took out Equitable Life policies in the early 80s. We all know what happened. Anyway, all these With Profits policies are being transferred to Upmost at the turn of the year - and the funds are going to be increased by a substantial amount. This has all been voted for and gone through the Courts etc.

I only have the one policy but my mate has three separate policies with them. He also has three other policies with Phoenix. Now, I'm aware that being over 55, I can take out 25% tax-free at any time, but can my mate just apply to both Equitable AND Phoenix (if he wanted) and take out 25% tax free? (from both sets of policies). Or can you only take out it out of the ONE pot with the one company (I aa aware you can only remove whatever percentage you want to ONCE.

In short, my question is, just because his pension is spread across different companies, can he still take 25% of HIS WHOLE POT ADDED UP ACROSS THOSE COMPANIES, tax-free?

Thanks

[JulianPH]

Quick answer - yes.

[Stay in Bed Instead]

Slow answer - yes, providing the policy terms permit it.

[chip*]

Per link below, one option is covered under the "Take your whole pot" X each pension pot.
Worth reading up the link below as it list all other options available to you and your friend too.

Also include a simple tax calculator estimating your tax liability too.

https://www.pensionwise.gov.uk/en/browse/taking-yo...

Edited by chip* on Friday 6th December 15:02

[JulianPH]

Stay in Bed Instead said:

Slow answer - yes, providing the policy terms permit it.

Longer answer, now I have some time, it is also worth checking whether these old policies allowed higher than 25% to be taken as tax free cash.

Not common place, but far less rare than people may realise.

A big downside here is that such policies usually always require you buy an annuity with the balance at the same time as taking the tax free cash element.

This is something the OP and his friend need to check on regardless of whether there is an enhanced tax free cash (sorry, Pension Commencement Lump Sum). If so they may wish to move this to a provider that doesn't trap them into this.

[cloud_dog]

No trap required, these types of providers simply do not offer drawdown services, they do not provide PAYE services.

Depending on any guarantees, simply transfer to a service that does provide drawdown. You may want to check costs associated with drawdown, for example Fidelity and HL make no charge for drawdown although other charges need to be considered.

[uk66fastback]

Thanks for the answers. I realise everyone's case is different but surely taking an annuity when in your late 50s and not looking to retire anytime soon is just not the done thing?

[JulianPH]

uk66fastback said:

Thanks for the answers. I realise everyone's case is different but surely taking an annuity when in your late 50s and not looking to retire anytime soon is just not the done thing?

I would agree with you completely (though no doubt some may disagree with me on this).

The annuity rate would be so low at that age (incredibly more so if you want it inflation linked and with a widows pension) that it does not make economic sense for anyone other than the annuity provider offing it.

Plus, of course, your pension funds have gone altogether so your family is deprived of this IHT free inheritance.

Just my musings, of course.