I have 3 Pension Pots and 1 Defined Pension Scheme. I am 57 years old.
I am planning on starting to take my Defined Pension Scheme payment when I am 58 later this year. This will be around £600 per month (there is no cash lump sum included in this).
I have 3 other Pension Pots which I plan to leave invested for several more years before deciding how to invest them.
Will the fact I am taking my Defined Pension Payments this year impact my ability to take 25% cash from my other Pension Pots in future years ?
Replies (10)
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Can I ask, as this is presumably a significant financial decision and there are potentially significant consequences to what you are planning, whether you have considered talking with a pension advisor?
Good. It is by far the most sensible thing to do.
On that basis, the answer to your question is no (as below).
Is there not an actuarial reduction in the DB pension if taking it early (if 58 is early per the scheme rules)?
I know with my other half, as I checked it just the other week (her birthday), that if she goes now age 61 the figure is a reasonable amount lower than that forecast at 65 (original scheme age-Local authority) , although one does need to calculate that obviously one will be in receipt of the lower pension for more years if one does go early than if one waited until 65. In her case the pension in payment age 61 is circa 25% lower than what would be paid age 66 (lump sum barely changes) but this includes 4 more years service.
(Edit- My first ever audit was a group of DB schemes and in year two of my training, back at the same client, I even checked the commutation calculations(though obviously the underlying actuarial assumptions flew right over my head). Pensions are always interesting)
You can take your 25% tax free from each pension pot regardless of other pensions (in payment or not).
That may change of course in March....
I can't give you any advice per se but I would suggest that you ask how much the transfer value of the Defined Pension Scheme is and also ask them for a copy of the scheme rules. Your Financial Adviser (hint hint) will ask you for this information anyway. I suspect you might find that £600 per month at 57 years old means you have a much bigger pot and transfer value than you may think that might well serve you better through a drawdown scheme depending on your circumstances of course! How about an appointment with Pension Wise as an absolute very minimum:
He/she wasn't asking about transfer values - only if he/she could draw down 25% without penalty.
I strongly suspect that the OP is asking the wrong question! :-) In the absence of any tangible facts I have responded accordingly.
https://www.moneyadviceservice.org.uk/en/categories/pensions-and-retirement
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