Pension Choice

Has anybody got a ballpark figure for how much I wuold get as a lump sum if I withdrew it all when Im 55. Its a bit of an ambiguous question but I have never dealt with pensions before, only paid into them. And when I say ballpark I mean would I get a £5k or £100k? I have no idea. Ive worked for approx 35 years in IT and paid all my contributions.
 
Gorton_Tubster said:
Has anybody got a ballpark figure for how much I wuold get as a lump sum if I withdrew it all when Im 55. Its a bit of an ambiguous question but I have never dealt with pensions before, only paid into them. And when I say ballpark I mean would I get a £5k or £100k? I have no idea. Ive worked for approx 35 years in IT and paid all my contributions.
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How much is your pension pot ?
You haven't given much information for such a difficult and ambiguous question.
 
Gorton_Tubster said:
Has anybody got a ballpark figure for how much I wuold get as a lump sum if I withdrew it all when Im 55. Its a bit of an ambiguous question but I have never dealt with pensions before, only paid into them. And when I say ballpark I mean would I get a £5k or £100k? I have no idea. Ive worked for approx 35 years in IT and paid all my contributions.
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Everything after the first 25% is taxed so after 35 years of paying in, I reckon you’d be paying a lot in tax by doing that.
 
Fiftyyearsandcounting said:
A pension company has made an offer to convert one of my annual pension into a one-off lump sum.
This is only a small pension of £900 paid annually (fixed for life) and the offer is for 10x (tax at 20%).
I am 73 and reasonably fit for my age except for Type 2 Diabetes which is under control.
This pension is not regarded as part of my budget as such and is used just to treat myself.
I am single, no dependents, own my home and do not owe a single penny.
There is no negotiation, a one-time take it or leave it deal.
Take it or leave it?
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Go for it.
You would wait a long time to get that as an increment.
 
Gorton_Tubster said:
Has anybody got a ballpark figure for how much I wuold get as a lump sum if I withdrew it all when Im 55. Its a bit of an ambiguous question but I have never dealt with pensions before, only paid into them. And when I say ballpark I mean would I get a £5k or £100k? I have no idea. Ive worked for approx 35 years in IT and paid all my contributions.
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Is it a DB or a DC pension?

If it's a DC pension then it's simply the value of the pension pot. The first 25% is tax free and the rest is taxable at your marginal rate. So expect to pay a fortune in tax if all withdrawn at once. A phased annual drawdown to reduce tax would be sensible.

If it's a DB scheme then it's more complicated. A multitude of factors will affect its cash equivalent transfer value ...eg benefits, caps on index linking and how keen your provider is for you to transfer out. You must obtain financial advice if the CETV is over 30k. The financial advice is not likely to recommend a transfer.
 
Tommy_Catons_Perm said:
Is it a DB or a DC pension?

If it's a DC pension then it's simply the value of the pension pot. The first 25% is tax free and the rest is taxable at your marginal rate. So expect to pay a fortune in tax if all withdrawn at once. A phased annual drawdown to reduce tax would be sensible.

If it's a DB scheme then it's more complicated. A multitude of factors will affect its cash equivalent transfer value ...eg benefits, caps on index linking and how keen your provider is for you to transfer out. You must obtain financial advice if the CETV is over 30k. The financial advice is not likely to recommend a transfer.
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That's very useful. Thx v much. Not sure if it is dc or dB though I'm off to find out
 
Gorton_Tubster said:
That's very useful. Thx v much. Not sure if it is dc or dB though I'm off to find out
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It's quite fundamental.

DB schemes are far superior and were common for the older working generation and today's pensioners.

Sadly DB schemes are unaffordable for employers nowadays and today's workers / tomorrow's pensioners must make do with a DC scheme with all the risk and financial management on the individual.
 
Gorton_Tubster said:
Has anybody got a ballpark figure for how much I wuold get as a lump sum if I withdrew it all when Im 55. Its a bit of an ambiguous question but I have never dealt with pensions before, only paid into them. And when I say ballpark I mean would I get a £5k or £100k? I have no idea. Ive worked for approx 35 years in IT and paid all my contributions.
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If you’re doing that you’ll need a Financial Adviser. You must have pension statements. It’ll be in there somewhere. Probably not with the headline figures but hidden away on one of the pages at the back.

As stated you should not withdraw it all as cash but invest it. If it was 100k you would get £25k tax free and pay top rate tax on £75k so you’d lose around half of £75k. Putting into investments you can draw what you need and manage your tax each year and hopefully keep the capital if we get out of this mess!
 
This year is bad if your retiring but next year will be even worse because you won’t have time to recoup what you have lost this year.
 
Gorton_Tubster said:
Has anybody got a ballpark figure for how much I wuold get as a lump sum if I withdrew it all when Im 55. Its a bit of an ambiguous question but I have never dealt with pensions before, only paid into them. And when I say ballpark I mean would I get a £5k or £100k? I have no idea. Ive worked for approx 35 years in IT and paid all my contributions.
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If it’s a DB pension the value is normally 20 times the yearly income.

So if it’s say worth 20k at retirement, the actual value of the pension will be around 400k of which you can take 25% tax free so 100k. The only sting is that if you have a retirement age of 65 and you take it early you will lose quite a lot.

It’s worth checking what your retirement age is as I had a nice surprise to find one of my final salary pensions when I worked in academia has a bizarre retirement of 62.5Yrs.

Normally DB schemes are based on 80ths or if you are lucky 60ths. A full final salary pension would be either 40/60 or 40/80. So based on the fact you’ve paid in 35yrs, taking it 10yrs early would reduce the fund to either 25/60 or 30/80.

So as a ballpark you will lose 5% for every year early you take your pension for one based on 80ths and slightly less for one based on 60ths.

For DC schemes it all depends on investment performance which pretty much across the board, most pensions have taken a hammering since the war in Ukraine kicked off. I know I’ve lost around 15% but I’ve got plenty of time to make it back by just purchasing shares whilst they are devalued and waiting for the inevitable recovery over then next 10 yrs.
 
Also unfunded public sector DB pensions like teachers or NHS cannot be withdrawn.
 
Simple probably dumb question

I pay in a automatic pension for my work

Can i just stop this ? and rejoin say in a years time ?
 
BlueHammer85 said:
Simple probably dumb question

I pay in a automatic pension for my work

Can i just stop this ? and rejoin say in a years time ?
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Just contact your payroll and tell them you want to opt out. I think it may automatically enrol you every year though.

A few years ago I did it with my employer as it was just the government pension scheme 2% contributions if I remeber correctly. Luckily I now work a decent firm with a decent scheme.
 
BlueMonkey79 said:
Just contact your payroll and tell them you want to opt out. I think it may automatically enrol you every year though.

A few years ago I did it with my employer as it was just the government pension scheme 2% contributions if I remeber correctly. Luckily I now work a decent firm with a decent scheme.
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Yes my work scheme is good, think it's nearly double what i put in

was thinking of stopping it for one year to pay off a loan, then rejoining

didn't actually know this was optional
 
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