Starting the process of accessing your DC pension

[Mazz]

I'm 60 and still working full-time.

I have a DC pension (2 actually, although only paying into the one where I currently work).

Those of you who are retired and have an annuity, I have a question... I understand that an annuity is an income for life, but what if you need a cash lump sum e.g. paying for son or daughter's wedding, new car etc?

Does the annuity allow some means of "withdrawing" cash from your pension pot? Thanks

 

[Gunk]

The other thing to watch out for is that, for the first withdrawal, they will use emergency tax codes as they won't have heard from HMRC. If you want to withdraw a reasonable amount, it may be worth withdrawing a smaller amount a month or so beforehand so that HMRC has sent the Pension company the correct tax code by the time you make your larger withdrawal.

If you withdraw a larger amount than you usually take at the beginning of the tax year, even if they have your tax code, their software assumes you are taking this amount every month so you get clobbered with 40% tax on the whole amount. I put a claim in to HMRC and got it back but The advice seems to be, if you are going to draw an additional amount, take it at the end of the tax year.

 

[Gunk]

I'm 60 and still working full-time.

I have a DC pension (2 actually, although only paying into the one where I currently work).

Those of you who are retired and have an annuity, I have a question... I understand that an annuity is an income for life, but what if you need a cash lump sum e.g. paying for son or daughter's wedding, new car etc?

Does the annuity allow some means of "withdrawing" cash from your pension pot? Thanks

It depends if you used all your pension pot to buy your annuity. If you did then you all you get is the monthly pension.

 

[Bonefish Blues]

...and building on that, if you need a lump sum, you could withdraw your tax free sum(s), and reserve the remainder of your pension pot(s) to buy an annuity with.

 

[Mazz]

It depends if you used all your pension pot to buy your annuity. If you did then you all you get is the monthly pension.

...and building on that, if you need a lump sum, you could withdraw your tax free sum(s), and reserve the remainder of your pension pot(s) to buy an annuity with.

I get you, many thanks.

Just to add that I've not started to take either of my DC pensions yet. But, I was wondering how the annuity/lump sum withdrawal worked, and you've answered that question.

A follow-on question...assuming you have an annuity , how long does it take to make a request and receive your lump sum? Is it done via some sort of online portal?

 

[Bonefish Blues]

I get you, many thanks.

Just to add that I've not started to take either of my DC pensions yet. But, I was wondering how the annuity/lump sum withdrawal worked, and you've answered that question.

A follow-on question...assuming you have an annuity , how long does it take to make a request and receive your lump sum? Is it done via some sort of online portal?

It's as individual as the company, as I've indicated in my earlier posts. Somewhere out there's a company that needs it written on the side of a pig, I expect! My wife and I have experienced every shade, from the really slick portal-enabled to the provider that she's currently got a case waiting for resolution by the Ombudsman.

If there's any maxim I'd pass on, it's start early and check everything, making sure that you understand the individual company's processes.

 

[ebikeerwidnes]

When I triggered my pensions I had a long chat with the people who ran it

I have 2 - both the old fashioned ones based on your final salary - so it will not apply to everyone
and also every one seems to work differently

But both had an option to take some of it as a cash sum but then get a reduced pension from then on
My pension from my first workplace had all sort of options and they went through them all with me
there was eve an option to take a large amount as a lump sum but the advisor said that he would only recommend that for someone who knew their lifespan was limited - e.g. terminal disease etc

I would suggest that anyone getting to that point ring the company involved and talk it through to make sure you know all the option - even if you think you already do

 

[Mazz]

Nice one @ebikeerwidnes and @Bonefish Blues. Many thanks again.

@Bonefish Blues, I hope you get some satisfactory outcome with the ombudsman.

 

[Mazz]

I have 2 - both the old fashioned ones based on your final salary - so it will not apply to everyone
and also every one seems to work differently

But both had an option to take some of it as a cash sum but then get a reduced pension from then on

Same here - the first pension plan I ever had was a Defined Benefit (AKA final salary) - I was only in that scheme for 3 years before moving job. I'm drawing that pension now - I got a lump sum out of it and a monthly pension for life, albeit the amount I'm getting monthly is just a bit of pocket money, if I'm honest.

 

[fossyant]

Same here - the first pension plan I ever had was a Defined Benefit (AKA final salary) - I was only in that scheme for 3 years before moving job. I'm drawing that pension now - I got a lump sum out of it and a monthly pension for life, albeit the amount I'm getting monthly is just a bit of pocket money, if I'm honest.

I've done that same thing with a final salary scheme I had when I first started working at 18. I've taken the pension from 55 because all the calculations I did said this was way better (I am an accountant). I have two others that are parked in a drawdown, so I take nothing unless needed. I am still working, in another scheme that i have nearly 20 years, but only 56, but plan of finishing by 62 at the latest..

Ask for your figures and options, they have to give it to you.