Retirement - Evaluation of Your Plans

FIL is having a go, just waiting now. To be fair his SJP stuff has done remarkably well recently.

My plan is to get as much as possible from the company into my pension for the next couple of years then sell my half of it to my business partner whose a lot younger than me over a period of time. That should give me the equivalent of at least 10 years full salary while my pension remains invested.

59 next month and think I'll probably do another 2 or 3 years. I'm in no rush as I enjoy working and we are both looking to move to 4 days a week next year.

Kryton, you're going to love Millom.

My actual pension is pretty meh but the long awaited annex holiday let should be firing up in the next few weeks do once that's paying the mortgage its game on. Save more as currently I'd be looking at working to 67, this needs to drop to 60, which I think is possible.

Mortgage currently until 67 too so will look at shortening the duration as we remortgage and overpay spare income from the let (it's all one property) Come the mortgage being paid off we'll stay here using the holiday let income as, er, income so will be able to retire/work less until it's time to downsize. So SHOULD be well catered for. But the best laid plans of mice and men.....

Being issued my “Blade Runner” style termination date at 53 was a total life-changer… (Stage 4 prostate cancer… “maybe 5 years”). Life-changing in a positive way: Now 55, I’m retired and generally feel quite well at the moment. My termination date has made me focus and re-evaluate. I’m genuinely happier now than I’ve ever been. Obviously I’d prefer not to have the symptoms and side-effects, but I now have a better understanding of what is important to me and I appreciate life so much more. Everything IS amazing 🙂

A good friend is in the exact same situation, only the hormone treatment is working for longer than expected, he's had 5 years to live now for the last 15 years. All they can tell him is that at some point, the blocking / unblocking testosterone will stop confusing the cancer and at that point it's game over. They just don't know when that will be.

Question:  I have a tiny amount in an old civil service scheme from 30 years ago. I can claim it at 55 it will pay £1500pa and a approx £5k lump sum. What are the benefits of leaving it for the next 5 years.

Can I even access it and if so will it be taxed at 42% (my current tax band)?

Edit: sorry answering a different t q than you asked!

Email your provider,  they'll have the specifics

47 and only started paying in to a pension relatively recently. Low to minimum wage jobs and bills to pay doesn’t leave much for saving unfortunately. In a much better position now but have two young kids and I’m the sole earner. Basically I’ll be working until they drag my cold, dead, corpse out of whichever building I happen to be working in at the time.

Does anyone publish a comparison of charges & performance of pension companies?

I've got pensions with Reasure, Phoenix life & Peoples pension but feel I should transfer for a better deal.

I’m also somewhat concerned that I’ll be bored when I retire. I only have a small circle of friends and I’m the oldest (and Mrs Vlad won’t retire for another 2.5 years minimum) so I’ll have no play buddies to keep me occupied during the days I’m not out and about in the campervan….

When my uncle got to this stage he went to 3 days a week. He allocated one of his newly free days to hiking, and one to reading, and also found that he had enough spare time now to restart his old season ticket to the local team.

When he fully retired, he volunteered at the local Oxfam music and bookshop, which allowed him to indulge his other hobby of browsing records and books, but being useful!

He later had a severe stroke in his early 70s. I'm glad he had some good years first.

@theonhundredthidiot contact the provider to give you some comparisons about taking lump sum from 55 and a pension. I've had some initial figures on one such scheme and the difference between starting drawing the pension at 55 or at 67 isn't much believe it or not. This is a very old final salary scheme I have which hasn't been paid into for over 30 years.

Pardon my ignorance, but where’s the extra £138 coming from?

One of the perks my company does is adding their employer"s NI to anything I put in my pension.  So far so un-mazing, but the weird thing is that they do it at the 13.8% lower ( standard?) tax rate rather than the marginal 2% rate that they are actually saving. So I save 40% tax and 13.8% NI.  Daft but handy

its always worth remembering that you’ll get taxed on 75% of that later on,

Agreed, but at a pissy rate. There's no way my post work income will be above £50k, And around a third of it will be from ISA so I doubt I'll be paying more than 10% tax in total.  Which is about what I pay now....

My Dad died aged 67. 6 Months after retirement.

I stopped work at 51 in 2016 after taking a big redundancy payment. Now have a small business which have built up and now takes a couple hours a day and pays enough to be comfortable, but not extravagant with no mortgage.  My work pension kicks in in 5 years aged 64 and will be £22k plus they make up my £11.5k state pension for the 3 years until I am 67.

I consider I am very lucky. I was also piling money into my pension at 30 when my peers were having great holidays every year. Luckily cycle touring holidays are cheap. Also I have no kids & I cashed in my Thames Valley house for a much nicer house in Scotland 2 years ago.

Its simple really the more you pay when younger the better off you will be. Plus you need way less than you think in retirement and whilst working are trapped in it. Once out a whole new world of possibilities emerge that you would never see when in your career. I do a bit of voluntary work which I would like to increase.  Quite liberating really. Go as young as you can.

I’ve been planning for retirement since age 25. Now 43 and the concept is becoming real which is quite strange. I’ve tried to balance spending and saving but feel I can dial back saving now. Investment returns should see me have enough at age 55. Plan is to carry on saving into ISAs more so I can bridge over to pension from around 50. I’ll probably reduce hours significantly at 50 or change career.

I overpaid into AVCs on top of a final salary pension for 22 years. Then just into a DC pension for the past two years. I plan on taking the 25% lump sum, living off the final salary benefit, and leaving a DC lump sum in a will (free of IHT). If (actually when) tax laws change, I’ll change my plans.

I could retire at 56, but like my job - I think for a living rather than lift bricks or dig roads like my grandfather. If the the rules change, I’ll retire and do something else. Voluntary academic sounds like a nice role. I wouldn’t mind a little travel chasing the tours in a motorhome. I have no idea of life expectancy as I’m a member of the orphan club, and one sister died at 48. So am older than the median age for my family already, and financially probably far too cautious!

Question:  I have a tiny amount in an old civil service scheme from 30 years ago. I can claim it at 55 it will pay £1500pa and a approx £5k lump sum. What are the benefits of leaving it for the next 5 years.

Can I even access it and if so will it be taxed at 42% (my current tax band)?

Yes you will be taxed on the £1500 as it is income on top of your existing income so the benefits of leaving it for 5 years is that you won't be losing 42% of 1500 a year in tax and in theory it will continue to grow where it is so may be more than 1500 a year in 5 years time (guessing as don't know your pension scheme)

Anyone that's done it know the answer to this as there were two versions earlier and I couldn't see a definitive resolution.

Background - I've got 6 DC pensions - yes, I should look at consolidation - 4 employer that I'd categorise as 1 small (20k) 1 medium size (50-100k), one quite large (300k+), and one current that is reasonably generous on contribs and so keep paying all the time I work - which i enjoy and don't plan to give up yet (I'm 55). I don't want to touch that.

Then I have as a result of paying into an AVC another 12k approx in a last one.

So - I can take up to 25% of any of these (or all) as a lump sum.

The question - someone said if I take this tax free cash, I am then capped to 10k a year in future contributions.

Someone else said no - as long as it's within the 25% then the MPAA isn't triggered.

Who's right, as accessing the tax free cash from a couple of these could be very useful in a few months time. I could find it another way but I think getting 8-10k out tax free hardly affects my overall pot (-2% ish) and is better than a loan.

Depends on the markets!

Though within the next few years would be nice. Planning on dropping to 4 days a week next year anyway. In the fortunate position of doing a fun job that pays OK.

SO retired early a couple of years back and can’t believe how they squeezed everything in back then .

folks may already have seen that Martin Lewis did 2 MSE specials on pensions recently.
https://www.moneysavingexpert.com/site/listen-to--the-martin-lewis-podcast-/
How to take money from your pension July 2024
Pension need-knows July 2024

Just checked If I retire at 60 I get 15k a year...guess I'll be working for a while then.

The question – someone said if I take this tax free cash, I am then capped to 10k a year in future contributions.

Someone else said no – as long as it’s within the 25% then the MPAA isn’t triggered.

I went through this recently and you can take tax free amount and up to £10,000 taxable amount before MPAA is triggered.

It is detailed here -->  https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

Older readers will remember SERPS, and the option to contract out. I did, and its worked for me. Just taken 25% tax free and drawing down the rest (as a monthly amount) from about a month ago, to give me enough to last until the state pension arrives in 5 years (with some other private pensions). So have just retired at 62. I have a long list of things to do so it's working fine for me, but it is the summer, so we'll see how it is in the dark winter days when cycling is less of an option.

I was also piling money into my pension at 30 when my peers were having great holidays every year.

As Einstein noted, compound interest is the eighth wonder of the world.  Given your son will not be able to access those carefully accrued pension savings until at least 57 he may want to consider putting some money into an ISA - there are no top ups but the increase in value is tax free and the money can be accessed earlier free of tax if needed.

Hmmm. Members of that famous fund/ pension provider that went bust a while back would beg to differ.  I’m keeping my eggs in a few different baskets.

Me too, I've 5 DB and 3 DC pensions, all kept separate.

Old enough to remember Maxwell, and I know the world of pensions has changed, but the people in it haven't...

Auto enrollment is a great thing. I’ve a 21 year old with 2 years of pension already saved, and an employer who matches employers savings up to 10%…..The maths on him starting a pension at 18 and it compounding is startling

I wish auto-enrolment had been around when I was starting out. As it is aged nearly 40 I've only been saving into a pension for roughly 10 years, and am doing my best to make up for lost time by piling as much money into that (and my S&S ISA) as is reasonably practicable while bringing up two small children. I cannot wait for the nursery free hours to kick in that's for sure.

No complaints here though, as I also have benefited from things like hand me down cars (currently driving a deeply fashionable 20 year old Honda Civic), and a job where I can WFH, walk or cycle to work.

I'm not worried about retirement per se, but I've definitely got an eye on it. I just hope I can provide for my kids how I'd like while still being able to retire at some point.

Money and things you can re-aquire…. Time, you cannot.

Again, this kind of fridge magnet philosophy could very well come back to bite you when you're in your early eighties, penniless, with the very real prospect of living another ten or fifteen years.

Auto enrollment is a great thing. I’ve a 21 year old with 2 years of pension already saved, and an employer who matches employers savings up to 10%…

Public Sector?

This is a greater matching percentage than I've seen in the Private Sector for even DC's never mind just basic Auto Enrolment for at least decade (probably +15 years), and for senior SME's.

As Einstein noted, compound interest is the eighth wonder of the world. Given your son will not be able to access those carefully accrued pension savings until at least 57 he may want to consider putting some money into an ISA – there are no top ups but the increase in value is tax free and the money can be accessed earlier free of tax if needed.

He plans to buy a flat or house as soon as he can.

I was going to say make sure it's a house not a flat so as to avoid pouring his earnings into a leasehold black hole but then I remembered you're in Scotland where apparently you can have nice things.

The only advice I would give on pensions is spend time understanding them, it really isn't that difficult although the pension companies, IFAs and other parties taking a slice of your pot try and make it so.  Start off with the Boring Money videos on YouTube. Other good YouTube channels on this topic are Chris Bourne, PensionCraft and Damien Talks Money.

edit - and The Martin Lewis links above

Does anyone publish a comparison of charges & performance of pension companies?

I’ve got pensions with Reasure, Phoenix life & Peoples pension but feel I should transfer for a better deal.

Phoenix are notorious for high charges and in my case  make it difficult to transfer out based on the transfer value.  I've got a pension with them that is currently worth £45k but a transfer value of £24k.  This is one of the old With Profits pensions so things may have moved on.  If you can get a good transfer value moving to a SIPP should be a better option but some of the older policies have minimum guarantees so you may need to take that into consideration.

Just checked If I retire at 60 I get 15k a year…guess I’ll be working for a while then.

Well I'm currently hoping to go at 61 on £14k a year! It's a little way off so I might be able to boost that a bit. But it would do the job.

My SIL is in a place where she could retire. One of her pensions 'matured' a couple of years ago - lump sum and started paying out. When my wife asked her this week, why doesn't she stop working (only part time) she said she still had to pay NI and didn't agree with it. Reason:- she's done the maximum years for state pension, but she believes she still has to pay NI so she needs to work - thinks it's unfair. No point explaining that if you aren't earning you don't pay NI, and if everyone pay's tax and NI if earnings are above a certain amount. She has it in her head she's got a bum deal !

If you take any out, you need to limit it to the 25% tax free without it kicking in the limit. This is important to me as my contributions, plus my employers are well over the £10k per year.

My Plan...

Work full time till early 60's - then bumble around doing part-time work as and when I fancy! 🙂

No cruises for us, as neither of us has great pensions, but we own our own home and have little debts.  But to be honest the thought of a cruise sends shivers down my spine anyway.

We may move to the east coast as property is cheap there and we could release some capital.

My employer pays 14% if you volunteer to increase your contribution to 8% OR more.
So I pay 9% and they top me up with 14%
This , plus a few quid bunged into vanguard every month makes a huge amount over time . And yet very few people actually take advantage, same as the share option scheme which sells you discount shares on a sort of hp deal

Again, this kind of fridge magnet philosophy could very well come back to bite you when you’re in your early eighties, penniless, with the very real prospect of living another ten or fifteen years.

True, but I'm not planning on sitting out my years in a country that's expensive and has shitty weather..... Not stuck indoors all day and no heating bills to worry about.

And if things get that bad I know a few places where you get top yourself without any paperwork or a trip to Switzerland.

@shinton +1

55 next year but an unexpected and deeply saddening inheritance has changed things for us, with a possibility of winding down at 55.

I did post a while ago about the “value” of an IFA, and can now attest that ours has helped us hugely.  They are not unsympathetic, but purely from a numbers game, ours is all over our options and provides excellent modelling and scenario comparisons to help us make decisions.

I know that it’s possible to deal with all this yourself, and plenty of good videos out there (James Shack being a good one) but for all their life lesson and money sense, they can’t help your individual set of circumstances.

I do think engaging a good Financial Planner is a good investment.

I woke up to the reality of my finite career in my late-mid 40s, which is apparently completely normal.

It took me a year or two of half hearted and intermittent self education to learn enough to start making active choices with fund allocations and consolidation.

I have consolidated a series of smaller DC pensions into my workplace pension where I have just enough choice of funds for the options to be meaningful and hit the maximum rebate on the management fee.

I have a small DB pension from my graduate job that is worth about 3k a year I'm about to pull my share out of the scheme and invest it in a SIPP where I'm confident I can get it to perform much better than it is.

50 at the moment an aiming for early 60s to retire when the mortgage is paid off at 62. In the meantime I'll start saving into the pension more aggressively once a kids are finished union a couple of years.

Again, this kind of fridge magnet philosophy could very well come back to bite you when you’re in your early eighties, penniless, with the very real prospect of living another ten or fifteen years.

For me there is a balance - I am saving for a retirement, I know I will not be rich, but I can get out and walk, ride and enjoy where I live.
I plan on working full time until after 60ish, then look to step down hours. I plan on moving to a cheaper, more countryside accessible place, a place I may not need a car, downsize to an energy efficient home and release more money, and look to volunteer in the community and enjoy the nature around me.
I do see people, and so many recommendations, that somehow working so hard you lose out on life now, so that you can afford holidays and cruises as a 'dream' in old age just means nothing to me. I want to have food, clothing, a warm home and some friends and nature around.

If you take any out, you need to limit it to the 25% tax free without it kicking in the limit

Whilst we're on the subject of the 25% tax free lump, bear in mind that if you take it as a lump early on then it's likely to end up being a lot less than 25% of the money you get from your pension fund.

it’s likely to end up being a lot less than 25% of the money you get from your pension fund

Not sure what you mean exactly but if you have a SIPP then an option is to crystallise a portion of your total fund then take 25% of that tax free. You can leave the remaining amount invested and hopefully that will grow. The remaining uncrystallised amount remains untouched and again, hopefully that will grow also. You can then crystallise a further amount and take 25% of that. You can continue to do this until you have crystallised your whole fund but in doing it in stages (possibly 1 years cash requirement at a time) then by the time you have finished, assuming some growth in your fund, then you will end up with >25% tax free cash in total.

Never had a specific plan or strategy, but we are both fortunate & higher earners, other half is in the civil service so she has a great pension & im able to max out my annual contributions along with other investments, ISA’s etc.

We both had a life before we met & we’re now late 30’s & early 40’s so we had a property each which we kept & have rented out, both with only a few years left on the mortgage & our main house is a now a pretty low LTV, so once they are done, I think we will look to make some choices with how we live.

I think realistically we could jack it all in before we got to 50 & have a comfortable life but I still have a bit of a dream of having a little place somewhere along the Ligurian coast that we can just disappear off to when we fancy it - maybe we should just stop dreaming & start doing.

I don’t see the point in living like a monk to enjoy a life over 60, my view was always a bit more skewed to living for the moment - in the last 10 years or so, work has enabled both an early finish option, without living like a monk to achieve it, which is a fortunate position to be in.

I've pals my age who haven't had kids (and then grandkids) and I've no idea why they're still working - they won't be spending their wealth before they die.

Not sure what you mean exactly but if you have a SIPP then an option is to crystallise a portion of your total fund then take 25% of that tax free. You can leave the remaining amount invested and hopefully that will grow. The remaining uncrystallised amount remains untouched and again, hopefully that will grow also. You can then crystallise a further amount and take 25% of that. You can continue to do this until you have crystallised your whole fund but in doing it in stages (possibly 1 years cash requirement at a time) then by the time you have finished, assuming some growth in your fund, then you will end up with >25% tax free cash in total.

We're basically talking about exactly the same thing, but with a slightly different perspective .  In fact I agree with everything you wrote there apart from  your >25% conclusion. In my mind it's <25%

I have a suspicion that you're saying it's >25% of the total pension value at the point you take your first crystal.  I'd say that was true but not a relevant measure.

What I'm saying is that it's <25% of the total amount you will get out of your pension.

Would you agree?

compound interest is the eighth wonder of the world

that may be, but for a pension that has a chunk invested in equities or funds it only takes a Truss/Kwarteng type snafu and a chunk of growth and even capital can disappear in an instant.

see also ‘inflation’.

that may be, but for a pension that has a chunk invested in equities or funds it only takes a Truss/Kwarteng type snafu and a chunk of growth and even capital can disappear in an instant.

Yes indeed, it would be pretty sub-optimal if that happened just before you were about to retire. The point though is that if you are invested for long enough, you will be up overall compared to cash in the mattress regardless of peaks, troughs, and inflation. All about time in the market, not timing the market...

One of the perks my company does is adding their employer”s NI to anything I put in my pension.  So far so un-mazing, but the weird thing is that they do it at the 13.8% lower ( standard?) tax rate rather than the marginal 2% rate that they are actually saving. So I save 40% tax and 13.8% NI.  Daft but handy

13.8% is correct.  Employers doesn't  vary.  It is 13.8% on every pound above the secondary threshold calculated per period of pay (i.e. no aggregation over the tax year; it is a weekly or monthly threshold value depending on how you're paid).

You'll also be getting Employees NIC reductions on your payslip (just less NIC paid).  If you drop down through the thresholds you'll be getting some relief at 2% and then some at 8%.

It's not a kick in the teeth

What I’m saying is that it’s <25% of the total amount you will get out of your pension.

It wont be <25% of the total. The point being that by taking only some of your 25% entitlement you leave the remainder in to grow. When you take your next chunk you are taking it from a slightly larger pot. You are not getting >25% but because you are taking say 5% of your 25% each year for 5 years, and assuming the pot grows, each time you come back for another 5% it is 5% of a slightly larger amount.

Chris Bourne explains it here:

13.8% is correct. Employers doesn’t vary

Aha, thank you. I've had another look and I was indeed confusing Emp'ee and Emp'ee NI.  Makes sense now

Surfer, when you crystalise each of your chunks, what are you doing with the corresponding 75%?  In your post above you seem to be saying you leave it in.

I’ve always intended to take money as slowly as possible, using the 25% tax free amount as part of each withdrawal to minimise my ongoing tax bill and leave as much as possible still invested.
I’d think that unless you really need it, doesn’t make much sense to take 25% out straight away, since you then take away a huge chunk of possible future growth.

Yeah if you’ve no plans to spend the 25% pcls. Then might as well leave it in a very tax efficient wrapper.

I took the whole tax free amount out and paid for a big extension.  May not have been a bad use of it as it has increased value of house by more than I spent plus I get a nicer house to spend the next 10 years in rather than wait until I am 66 and then get it done.

So if you had a pot of say, 750k, you could take out 25% tax free, so what if you took out 40k per annum, annually, would this be tax free up to the 25% limit ?

Yes, I do have an IFA managed fund and will hopefully retire in 3 years or so age 61, but haven’t done detailed drawdown planning yet.

Surfer, when you crystalise each of your chunks, what are you doing with the corresponding 75%?  In your post above you seem to be saying you leave it in.

Yes leave it invested (you could disinvest it and leave it as cash but it remains in your sipp so the rules apply). You can only take 25% of what you crystallise so if I need £30k then I would crystallise £120k then withdraw 25% of that tax free. If my pot was, say £1m* then the remaining £880k is untouched and also remains invested. If I want another £30k I have to crystallise another £120k and so on. I can only take 25% of my total £1m pot but doing it this way each year allows the uncrystallised pot to hopefully grow, meaning the 25% is a larger amount of money but still only 25%.

*My pot is not £1m

So if you had a pot of say, 750k, you could take out 25% tax free, so what if you took out 40k per annum, annually, would this be tax free up to the 25% limit ?

IANAFA but that is my understanding and I have followed this process with my SIPP platform. So my understanding is you would crystallise £160k, withdraw £40k and leave the remainder uncrystallised. You then follow the same process in future when you want more tax free cash. I assume you could crystallise £100k the next year and withdraw £25k etc or whatever you wanted up until your whole pot is crystallised and you have withdrawn 25% of your £750k, hopefully your original £750k will have increased in value.

Thanks, I have a meeting with my IFA in a few months so this is good info for the discussion.

Alternatively 25% of everything you take out can be tax free if you don’t remove a lump sum - eg if you want 2000 per month £500 could be tax free, then the remaining £1500 would be taxable. Can continue to do that as infinitum as far as I’m aware - in this situation each time you take money out 75% of it goes into pension drawdown and the remaining 25% is tax free. Not sure exactly how it works technically, but the principle is there…!

Yeah, I had that in mind, as we are mortgage free and no need for a lump sum, thankfully.

Yes leave it invested

Exactly, so that bit continues to grow, which means that the 25% you took out ends up representing <25% of what the crystalised amount ended up as

Chris Bourne explains it here:

/blockquote>
Count how many cubes he has on the left.....20

Count how many cubes he has on the right....6

6/26 =0.2307 = 23.1%

Would you agree 23 is less than 25?

[img] [/img]

And to quote from your video

Based on the original pension value therefore, you've received 30% instead of 25%

Which is what I said here:

I have a suspicion that you’re saying it’s >25% of the total pension value at the point you take your first crystal.

 

That's really helpful, thanks also for the video links.

I'd heard about crystallising pots but the bricks made it make sense. I'd been looking at taking 25% out of the smaller ones, didn't realise you could crystallise parts of a larger one to get the same effect. Crystallising parts bit by bit to get more than the 25% out tax free though - I follow the logic but sounds like a fiddle 😉  No-one tell MCTD!!

Crystallising parts bit by bit to get more than the 25% out tax free though

Your not getting >25% though its just that the 25% may be a larger cash amount. You are simply taking your 25% over a longer period. Perfectly within the rules.

Exactly, so that bit continues to grow, which means that the 25% you took out ends up representing <25% of what the crystalised amount ended up as

I didnt say it didnt. you have taken 25% of the crystalised amount at that point. That may continue to grow and you will benefit from the growth, just not tax free.

As the uncrystallised grows and you then take another 25% of whatever you choose to crystalise next, then that 25% may be a bigger cash sum. The point of it all is by staging your withdrawals you may end up with more tax free cash than if you had withdrawn the whole 25% on day 1.

I have a suspicion that you’re saying it’s >25% of the total pension value at the point you take your first crystal.

Your suspicion was incorrect but I cant be held accountable for that.

I've just booked a Pensionwise appointment for some impartial advice.

I’ve just booked a Pensionwise appointment for some impartial advice.

Very good idea.  My company pension provider pretty much required it when I was taking my money out.

If you are taking money out but still retaining a pension that you are paying into there are a few things to consider.

I’ve just booked a Pensionwise appointment for some impartial advice.

You won't particularly get it from them; it's a useful service and I absolutely recommend but they can only advise in the sense of tell you the rules, and also gave me some advice on how to check fees for my various pots, and whether any have enhanced or special benefits, etc.

But they can't give specific 'helpful' advice, for that you'd need a genuine IFA.

Example as above - they could explain to you how crystallising funds works, and possibly also how that works wrt getting more (or is it less 😉 ) than 25% out tax free, etc. but in my scenario - I need to get my hands on about 10-15k in the next 0-6 months; should I just take the 25% out of the three small pots I've got, or take 25% out of the 50k pot, or crystallise 60k of my 300k pot and take that, or........ I'd expect a (good) IFA to run the numbers and implications on all and then basically tell me what to do that is most efficient, not just tell me the legalities of each.

Next question is how to find an IFA. I put details into Unbiased and was very disappointed; three responses, two from remote firms that didn't have local offices and one local but tied to a provider which I specifically said I didn't want. So I've put feelers out through the local cycling club for personal recommendations, but any other tips. How am i likely to be fleeced (er, pay for) their services and what sort of cost should I expect (absolutely reflecting if they're good they'll make that back for you by making sure your pensions and investments perform to their best, etc.)

@theotherjonv +1 Helpful but really aimed at making sure you have considered the options and are briefed on the alternatives. It was compulsory before I liquidated some of my SIPP but I had already read up quite a lot and thankfully he told me nothing I didn't already know. I did find my SIPP platform very useful (III) but the main source of my information is and was Youtube. Chris Bourne and Meaningfullmoney very helpful.

I'm with you @surfer, I'm not paying an IFA to borrow my watch and tell me what time it is, but I get why some people aren't that confident and need the comfort blanket of an IFA.

Going back to the original question has anyone started training for another trade/job as they're heading towards retirement.  Something that you can do self-employed on your own terms with a choice of the number of hours a week you work?

Fortunately, I have a decent pension but you can also earn up to £1,000 each year tax free, so I do photography gigs at cycling events which helps me fund my photography hobby.

I'm 58, no dependents, mortgage free, just need a weekly income of over £200 to top up some rental income & a part time job.

I don't need to take any out of the pots (plenty of easily liquidated investments)

I just take the 25% out of the three small pots I’ve got,

Not specific to you @theotherjonv because I think your small pots are larger than "small pots" in the pension rules, but I'm posting this to plug a tiny gap in all the other pension scenarios that have been covered.

There are special rules for cashing out pension pots less than £10,000 (small pots rules).  You can do this 3 times only in your life for personal or stakeholder pensions and any number of times for occupational small pots.  You have to cash them out entirely as a lump sum (as long as you're above pension age (55 now) and it terminates all benefits under that pension arrangement).

In itself, dong this isn't a crystallisation event so it apparently doesn't trigger the money purchase annual allowance.

For uncrystallised small pots, 25% would be tax free; 75% would be taxed at your marginal rate of income tax.  Apparently you need to have available lump sum allowance but the tax free lump sum amount is not in itself decremented from your lump sum allowance (weird rule).  If you're instead cashing out the remnant of a pot that has had some crystallisation, the tax free amount will only be on uncrystallised portions and MPAA will already be applicable.

There is also a separate rule for "trivial commutation" which is if all your pension pots add up to less than £30,000.  This situation might occur where you've been running down your pots with a plan to have ongoing reliance on the state pension only in addition to non-pension sources of funding (ISAs, rentals, part time work etc.)

Because trivial commutation is a separate provision, if you have small pots, you can take them first and trivial commutation can kick in if the remaining amount is below £30000.  This means that in an extreme example it may be possible to take up to £60000 through the combination of these rules (with 25% tax free in this way) if 3x personal or stakeholder pension small pots and more if there are multiple occupational small pots.

These rules are largely in place to assist people whose occupations (moving from job to job) have resulted in a very fragmented set of pension pots building up but they constitute a weird outlier part of the pension rules that might have value in other situations.

Yes, when I say small pots, I mean pots which are smaller than the others rather than the official definition, although FWIW one is well under £10k, one is just under but with current growth will be above in a year or less (unless we let Kwasi have another go) and one is already a bit over.

FWIW; one was my first job basic pension. One is some AVCs that I took out on the advice of a FA rather than pay extra into my job pension. And the third is a nice surprise where the owner of the AVC scheme (bought up and bought up again, and I think they were investigating some oddities) wrote to me and said they thought I'd been missold. I couldn't remember what the rationale for taking AVCs was other than that's what the FA had said, but they sent me scans of loads of handwritten notes that I remember being shown on the 24th floor of Centrepoint, asked me if I remembered them, I said yes (pictures of umbrellas were the main prompt !) and they said that it was hard to tell if I'd known what the pitfalls were but just in case have a pension with about £11k in that they said is their estimate of the amount I'd lost.

scans of loads of handwritten notes that I remember being shown on the 24th floor of Centrepoint, asked me if I remembered them, 

That sounds familiar.  I had an AVC from the Centrepoint dudes as well.

One is some AVCs that I took out on the advice of a FA rather than pay extra into my job pension

Of course he did. All that lovely commission he trousered.

All that lovely commission he trousered.

Probably. I was 21, must have been like stealing sweets. Although - it was my first job, and I remember at least when I started I was on 12.5k per year (1990, with a degree) and I stayed 5 years. So even with pay increases, probably earned maybe £70k total and I'd be surprised if I put more than 5% so even with employer contribs, maybe 10% so £7k paid in.

And the three are now worth 30k. As others have said, the 8th wonder of the world.

I’ve just booked a Pensionwise appointment for some impartial advice.

pensionwise offer guidance. IFAs sell advice. Check out the MSE pension specials I suggested earlier in the thread. The first one makes this difference clear and gives a good idea of what to expect of guidance and of advice.

I’ve always intended to take money as slowly as possible, using the 25% tax free amount as part of each withdrawal to minimise my ongoing tax bill and leave as much as possible still invested.<br style="box-sizing: border-box; --tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; --tw-rotate: 0; --tw-skew-x: 0; --tw-skew-y: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-scroll-snap-strictness: proximity; --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgb(59 130 246/0.5); --tw-ring-offset-shadow: 0 0 #0000; --tw-ring-shadow: 0 0 #0000; --tw-shadow: 0 0 #0000; --tw-shadow-colored: 0 0 #0000; color: #000000; font-family: Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, -apple-system, BlinkMacSystemFont, 'Segoe UI', 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; background-color: #eeeeee;" />I’d think that unless you really need it, doesn’t make much sense to take 25% out straight away, since you then take away a huge chunk of possible future growth.

Once I hit 67 and my State Pension comes in, if I'd have already taken all my tax-free cash then between the SP and all my other pensions I'd be paying higher rate income tax - I guess some of you will be the same.

Therefore seems better to retain the tax-free element and use it to reduce the future tax bill - or someone tell me I'm wrong?

No right or wrong answer and it depends on a number of factors.  The great thing is you have the flexibility to make it work in whichever way suits your needs best.