Taking Pension Pots - is there a correct order ?

I would like to make sure I make the correct decisions and in the right order

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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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By Tax Dragon
03rd Feb 2021 14:50

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?

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Replying to Tax Dragon:
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By grantmccall63
03rd Feb 2021 15:08

Yes, I do plan to speak to an advisor. I was looking for input to that conversation on this forum.....thanks

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Replying to grantmccall63:
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By Tax Dragon
03rd Feb 2021 15:32

Good. It is by far the most sensible thing to do.

On that basis, the answer to your question is no (as below).

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By pauld
03rd Feb 2021 14:57

how about you speak to a financial advisor?

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paddle steamer
By DJKL
03rd Feb 2021 15:26

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)

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the sea otter
By memyself-eye
03rd Feb 2021 15:24

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....

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By kestrepo
03rd Feb 2021 17:07

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:

https://www.pensionwise.gov.uk/en

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Replying to kestrepo:
the sea otter
By memyself-eye
03rd Feb 2021 18:06

He/she wasn't asking about transfer values - only if he/she could draw down 25% without penalty.

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Replying to memyself-eye:
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By kestrepo
03rd Feb 2021 19:47

I strongly suspect that the OP is asking the wrong question! :-) In the absence of any tangible facts I have responded accordingly.

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By frankfx
03rd Feb 2021 18:03

https://www.moneyadviceservice.org.uk/en/categories/pensions-and-retirement

It's a free at point of use service.

But funded by taxpayer.

The marketing too, has been funded at great expense by the taxpayer.

Have you seen the marketing?
( You have paid for it)

Aweb is free.

But you need reliable advice and guidance.

Which you may have to pay for, from post tax and NIC income.

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