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Answers to YOUR Questions

See what's bugging others. 

And what our experts say.

Pensions | Workplace Pensions | Private Pensions

How long does it take to release money from your pension at 55 years old?

Diane, West Yorkshire

01 May 2018

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Helena Wardle, Certified Financial Planner

The time it takes to release money from pensions depends entirely on the pension type and the current timescales for your specific provider.

 

Just after pension freedoms began in April 2015, this took a long time. Now, however, most providers are actioning clients' requests within about 10 working days. If you are drawing taxable income in addition to tax-free cash, it would be worth checking with your pension provider if they have a specific payroll date that they pay taxable income out on as this may affect how long you have to wait for the money to be paid.

 

Your pension provider would also be able to let you know the administrative forms and process for releasing money from your pension, and any additional information that they may need from you to process the request. You may have to provide proof of your bank account or identification and it's always best to check with your pension provider so you understand what to expect. Be aware that withdrawing from your pension may affect your ability to save further into pensions if you are accessing taxable income and tax-free cash from this withdrawal.

 

Please also be mindful of the tax implications on the withdrawal that you are planning. Up to 25% of the pension fund can normally be drawn tax free, if you are only releasing tax free cash then you would not need to worry about the income tax implications. Your ability to save more into pensions in future would not be reduced. However, if you draw tax free cash and taxable income the provider may tax you on a higher rate, and you would have to reclaim any overpaid tax either through a self-assessment tax return or by completing a form on the government website https://www.gov.uk/claim-tax-refund/you-get-a-pension. A bit time consuming and bothersome!

 

I hope this helps

 

Helena

 

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Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Workplace Pensions | Pensions

Do you have information on taking your pension pot before retirement? My husband is 62, on a final salary scheme & is trying to get clear information on it.

Jo,

17 April 2018

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Helena Wardle

I can appreciate that it can sometimes feel like a quest to get clear information on anything pension-related! 

Most final salary pensions would allow members to retire before the final salary pension's retirement age if you are over 55. However, the amount of income he would get would typically be reduced by what is referred to as an early retirement penalty.

Final salary schemes are very individual and each scheme has their own set of rules that stipulate whether there's a penalty for taking pension benefits early. Your husband can contact his pension administrator to request an early retirement quote. This would show him what his pension options are if he received the pension now and for comparison purposes, what his estimated pension income would be at his normal retirement age. The pension quotes would generally give him the option to just take income or to take income and a tax-free lump sum.  He can also ask the scheme administrators if he would have a penalty for drawing the pension early and ask them to specify what the penalty is.

To give you an indication: for most final salary pensions, there's between 3%-5% reduction in benefits for every year before designated retirement age. So, for example, if your husband took the benefits at age 62 and the final salary pension retirement age is 65 he could have a reduction between 9% and 15% based on typical early retirement penalties. You would need to weigh this up against the loss of income if you don't draw the pension now, and how this fits in with your overall income position in retirement.

Questions to consider: Can you afford to accept the reduced income for life in exchange for drawing the pension earlier? If your husband does have a penalty to take the pension early, do you have any other savings or pensions that you could use to defer drawing on the pension until he can take it without penalty?

I always recommend that clients get a forecast from the department of work and pensions, so they understand what their estimated state pension would be. This helps build up a clearer picture of what your pension income may look like https://www.gov.uk/check-state-pension.

If you struggle to decide on the best way to take the benefits based on the information the scheme administrators provide and want a professional opinion on what option would suit you best, you may want to contact a Financial Planner to discuss this further. Some financial planners offer a free initial consultation, and they would explain the services they provide and cost so you can decide if you would prefer to employ a professional to help you. You can use websites such as www.unbiased.co.uk or www.vouchedfor.co.uk to help you find an adviser.

I hope this helps!

Helena

 

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Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Investments | Pensions | Personal Finance | Workplace Pensions

Hi, I've got an old D.B. pension, approximate value £12k. I would like to invest & top up each month. Who would you recommend? Also I would like to make an investment, & don't know where to start? Thanks

Eve,

04 April 2018

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Helena Wardle

Hi Eve,

It's often confusing to decide ‘where to start' with pensions and investments.

Starting with your pension:

If you have left the company or are no longer an ‘active' member of the defined benefit pension mentioned, then you would not be able to invest further into it. Defined benefit pensions are generally based on the length of service that you worked for the company and the salary you earned while you worked there. Therefore, once you have left the company, you are no longer in service and cannot continue to build up new pension benefits. The benefits you have built up while working for the firm are effectively ‘deferred' and would normally increase in line with inflation until your company pension retirement date. 

If you are still working for the company and the defined benefit pension is still building up benefits for you, you may have the option to buy what is referred to as ‘added years' by contributing more as a lump sum or monthly amount if the pension scheme would allow it. The easiest way to check this is to contact the pension administrators and to ask them if you have the ability to invest further into your pension.

If you are unable to top up the pension and you are unsure of the options available to invest in a pension, you could contact a financial adviser to advise you on the options available.

Similarly, an adviser can help you decide on other investments, help explain terminology and planning that you need to consider before investing. It's often a good process to go through as it helps you consider the longer-term plans for the money and the best place to invest it to suit your plans and goals for the money. We all have areas that we understand very well, and I often get similar questions to help give clients direction.  It's easy for us to explain something that we work with every day and similarly, good financial planners should be able to bring the planning for money matters to life so you can understand how the different puzzle pieces fit together. Because you want to save into pensions and investments, it may be helpful for you talk this through to understand which balance between the two would suit you bets. Some financial advisers offer a free initial consultation, and they would explain the services they provide and cost so you can decide if you would prefer to employ a professional to help you.

You can use websites such as www.unbiased.co.uk or www.vouchedfor.co.uk to help you find an adviser. Alternatively, there are online investment providers that you can use to select a pension and investment yourself. Boring Money's Best Buys are chosen for their user review ratings, good value and good customer service. Have a look at Charles Stanley Direct, Hargreaves Lansdown, Nutmeg and AJBell Youinvest

I hope this helps,

Helena

Helena Wardle is a Chartered Financial Planner at Sterling & Law. 

 

Read more

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Pensions | Workplace Pensions

Can I sort a pension out myself online?

Sharon, Greater London

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Yes, you can open a pension online, but not every company which provides them offers this facility. For those who do, starting a pension online is very easy and takes less than 10 minutes. Managing a pension online is much easier and you will be able to view your pension account at any time and via mobile apps in some cases.

To set up the pension you will be asked for your personal details, such as address and date of birth, national insurance number etc, and if employed, the name of your employer and how much you want to pay. You can use a debit card to make a payment immediately or set up a direct debit.

The pension company will do electronic anti-money laundering checks behind the scenes and in some cases you might have to provide further evidence of your identity after your initial application.

You can also transfer other pensions into the one you set up, although the process for this often requires a mix of online and paper application.

If you are employed, before starting a pension yourself, you should check if you have been automatically enrolled into a workplace pension. This is important as your employer will also pay in where as they may not pay into a separate pension.

 

Read more

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

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