Discussion
I'm pretty close to retiring, recently switched to three day week. Still making modest contributions to workplace pension. Partial transfers not allowed - only option is to continue or close.
Workplace DC pension has been and is performing okay, nothing stellar but not bad. The investment options are limited and I think I could do better if I invested some of it in S&S ISA.
Considering taking first £20,000 PCLS to re-invest in either my Trading 212 or HL S&S ISA, and the same for the next few years.
Are there any downsides to doing so?
Workplace DC pension has been and is performing okay, nothing stellar but not bad. The investment options are limited and I think I could do better if I invested some of it in S&S ISA.
Considering taking first £20,000 PCLS to re-invest in either my Trading 212 or HL S&S ISA, and the same for the next few years.
Are there any downsides to doing so?
Two significant questions here appear to be "how much is your employer contributing?" and "will your employer contribute to any arrangement other than their own?"
If you close out the arrangement and take PCLS how many years will it take you to get your PCLS into ISA at a modest £20k p.a.? Or are you planning to "transfer out" to a different arrangement? In the interim Rachel Reeves will be hitting you at your marginal income tax rate, plus 2% (on dividend income or savings income).
Don't forget you can double up that £20k p.a. if you have a reliable life partner.
If you close out the arrangement and take PCLS how many years will it take you to get your PCLS into ISA at a modest £20k p.a.? Or are you planning to "transfer out" to a different arrangement? In the interim Rachel Reeves will be hitting you at your marginal income tax rate, plus 2% (on dividend income or savings income).
Don't forget you can double up that £20k p.a. if you have a reliable life partner.
It's worth looking at your DC scheme to understand the impact of taking partial PCLS because you will end up with a crystallised and uncrystallised pots. What impact is there to the charges, investment choices or amount of admin you need to do?
What are you looking to invest in that isn't available in your DC scheme?
What are you looking to invest in that isn't available in your DC scheme?
There will be no loss of tax relief as my contributions are a net pay agreement, taken from my salary before tax. My own AVC and company contribution will continue unchanged. Since switching to part-time I'm below the threshold so now on basic rate tax.
I've since spoken to pension provider who confirms taking part of my tax free lump sum leaves the rest as before. E.g. taking £20,000 tax free will leave two pots, one crystallised at £60,000 (still invested) and the balance as was (also invested).
They are not able to provide advice so can't tell me whether it's a sensible idea, but it's a viable option.
I've since spoken to pension provider who confirms taking part of my tax free lump sum leaves the rest as before. E.g. taking £20,000 tax free will leave two pots, one crystallised at £60,000 (still invested) and the balance as was (also invested).
They are not able to provide advice so can't tell me whether it's a sensible idea, but it's a viable option.
If you think you can do better diy then nothing to stop you.
Obviously if you can do so within the confines of a tax exempt environment so much the better.
This could include ISA’s or if you are “ more sophisticated “ as the disclaimers say you could look at EIS type lump sum investments which also attract tax relief in their own right.
Obviously if you can do so within the confines of a tax exempt environment so much the better.
This could include ISA’s or if you are “ more sophisticated “ as the disclaimers say you could look at EIS type lump sum investments which also attract tax relief in their own right.
Agreed. With OP's additional clarification that partial PCLS is permitted it now looks to be as broad as it's long, moving £20k from one tax free wrapper to another. Whether or not it turns out to have been a good idea will depend on future tax rules as well as future investment performance.
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