Caporegime
- Joined
- 21 Jun 2006
- Posts
- 38,372
lot of rubbish as it's reconciled at the end of the year.
Pension cash
- Thread starter koolpc
- Start date
lot of rubbish as it's reconciled at the end of the year.
£20k in a pension is peanuts when pension date comes, especially as he is approx 58. If it were me, i would be tempted to draw it all out.
Soldato
Good to know.
Yeah it wouldn't buy much of an annuity. If he's got a decent pension coming when he retires I see no reason why he shouldn't enjoy this one now while he is relatively young enough too.
I'm taking 25% in March, and leaving the rest in flexi access drawdown, I've got a defined benefit pension for when I retire at 67 but it's quite possible I won't live that long.
Yea, that seems logical.
With him i think he is more concerned about the emergency tax.
If Scottish Widows are deducting the tax at source, why would he be getting an emergency tax code?
Or, is it possible he wont get an emergency tax code?
My retirement is 67 too. Cant see me making that either! Lol
Soldato
i was going to start a similar thread but will mention here first ,i have the best part of 60k in small pots and have done the free government pensions advice meeting ,told to get an ifa to combine for drawdown but no ifa is interested ,basically saying its too risky for them to take it on ,i dont understand.
so i was thinking pensionbee ,has anyone used them ? or maybe asking aviva to do it as they have the biggest pots
its like i need advice to do it but cant get any
so i was thinking pensionbee ,has anyone used them ? or maybe asking aviva to do it as they have the biggest pots
its like i need advice to do it but cant get any
Soldato
I found the pension wise advice at my appointment quite generic, and they didn't tell me anything I didn't already know. I have heard that IFA's don't want to deal with small pots for some reason, which is less than helpful, especially as I believe if you have over 30k you have to get FA advice.
Simply and brutally put - There isn't enough of a fee to be generated to make all the work required worthwhile for an IFA.
Even charging 3% initial fee on 60k - £1800. Sounds like a decent fee but if you have 3 or 4 pots, the time/work/paperwork etc involved just isn't worthwhile at that level.
Sounds brutal but there is a huge "advice gap" being created for the "smaller" client as they simply can not access independent advice. That's not the advisers fault - but with the cost of PI insurance and the excesses rising all the time - an IFA won't take on a client if it's not worthwhile in the longer term.
You only required IFA sign off if your pensions are valued over £30k and are DB/Final salary schemes - you do not require an IFA if they are personal pensions.
The pension company taking the tax do not know what other income you have so can only base it on the income you are drawing from them. Once they inform HMRC of the income level etc - they can then set the correct tax code.
Soldato
ah ok may have to either use the pensionbee online service (i know someone mentioned in another thread) or just cash them in myself ,but dont feel confident to do this tbh ,i know aviva have a free advisory service but obviosly not impartial (in other words im still confused what to do)
So, mate contacted Scottish widows and for him to get a net £5k, the tax would be approx £1600, 24% he said. As he is a low income earner, under £12k a year, would the tax office automatically adjust if he has paid too much tax on that withdrawl or would he need to contact them? (I am thinking of charging him for trying to get general advice for him! Lol)
He has an appointment with an FE on monday which is provided free with our company.
Soldato
The continued lack of knowledge on the basics of pension in the UK is shocking. Yes, the fringes of pension legislation, especially historic stuff, is complex. But the majority is pretty basic. People pay thousands of pounds a year into them, and accumulate funds of hundreds of thousands of pounds, yet have a fraction of the understanding compared to much smaller amounts saved in ISA or other investments.
By all means ask, but please, just try and educate yourself a little and take some responsibility for your money that you are saving. As @booyaka says, no IFA will touch a small fund, or even a collection of them. But an IFA shouldn't be needed with some basic knowledge (and it is basic).
By all means ask, but please, just try and educate yourself a little and take some responsibility for your money that you are saving. As @booyaka says, no IFA will touch a small fund, or even a collection of them. But an IFA shouldn't be needed with some basic knowledge (and it is basic).
Like i said, its not my pension. Just trying to gather as much help as possible. Not everyone is an expert like you. Thanks for your input.
I dont see any help from you being that you are so knowledgeable on the subject.
Ok, i know he is seeing an FA on monday but all is asked is some general advice..
Soldato
I'm not having a go at you, it is just an observation.
These threads pop up every week or so. As I said, people save a good chunk of their monthly income into their pensions, often rivalling their mortgage repayments, yet have little understanding on what they can do with their money. Not the money - THEIR money - pension freedoms changed the narrative. The rules take a bit of getting used to for 90% of pension savings, but are very comprehensible. The other 10% - if they've got decent savings - need people like booyaka.
Ok, thanks.
Thing is, what this guy has is only £30k. He has a bigger pension set aside for when he retires. He just wants to draw from it to use now.
Soldato
I think the answers have already been given.
An annuity is near pointless, as it'll probably pay out only quarterly or annually at that size, and at any frequency it'll be peanuts. It sounds like he's already fully crystallised the fund and taken all available tax free cash, so the aim now is to look at all his available sources of income in any single tax year and draw on the other sources in the most tax efficient manner. The income from this specific pension now will be treated as earned income, i.e. subject to income tax alongside any other income in that tax year. What he shouldn't do is just take it all out to 'make it easy', as he may well pay a fair bit more tax for doing so. HMRC will very likely levy tax at the emergency rate if he does, and while this is reclaimable it is also very inconvenient and a hassle for a relatively small amount.
Yea, they quoted him 25% tax as he wants £5k net so approx £1600 in tax. Emergency tax apparently.
Soldato
Just don't blame the pension provider for this. HMRC are not able to keep up. MTD won't help enough either - it just isn't sufficiently connected.
Would HMRC adjust the tax accordingly automatically if wrong?
As the tax is taken at source, his monthly wages wont be affected i presume?
Soldato