My employer has a workplace pension scheme with auto-enrolment. Normally I work 16hrs a week which means my earnings are below the threshold for enrolment. Since the beginning of July I've been doing an extra day making it 24hrs and, having crossed the threshold, I'm automatically enrolled in what seems to be called a NEST scheme.
I'm told I'll get a welcome pack and opportunity to opt out. Initial thought was I'd take that, at 58 even if I worked three days every week I'd not accumulate enough for a pension. As the employer is a charity I'm also reluctant to take the 5% they contribute; I'd prefer the money funded our core service.
OTOH... My own contribution 3% plus 5% and tax relief (only at basic rate) would be a nice sum. AIUI one can take money out from age 55. I assume I cannot simply take the lot, including tax relief, straight away. How long do I have to wait?
NB: If a CA client asked me this question I'd refer them to Pensionwise. I suspect I could get an informal answer from the Pensionwise chap who's based in the office but I haven't seen him for weeks.
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I did opt in Bromp. I opted out of the VS scheme (for much the same reasons as you did) but they enrolled me anyway ( They also paid me for two months work after I left, which I'm still trying to resolve with them) - I've just had a letter from the pension fund (which has a made up name of random letters - I hate the modern world) offering to transfer it somewhere else. I'm going to phone them Tuesday.
It's a choice Bromp. I don't feel I need the additional income they offer, and have not intention of working much longer (ever)
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The Pensionwise chap will probably have the answer. I guess it depends what NEST allow you to do.
Their bumf suggests you can do UFPLS which means taking money directly from your NEST pot, (without having to do proper drawdown using a crystallised fund) which means that any payment you take out would be paid 25% tax free with the rest taxed that year at your marginal rate.
You can do this over 55. Whether you can do it while you are still contributing is the question, but it's a simple enough one that they should be able to answer.
Of course, when you get the money out you and have paid your tax, you can do what you like with it - including donating it to charity with gift aid, or buying the proverbial Lamborghini.
As it's a money pot, you can just leave it there, hopefully growing in value, and up to age 75 it can be used to provide a pension for a surviving spouse should you croak first. Presumably some of your current pension income would die with you if you predeceased her.
E&OE. I should really have this at my fingertips but my memory isn't that good.
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NEST has always been cheap, simple but very basic, so hasn't permitted a lot of the features of most other schemes. It was designed really for small organisations who didn't have their own pensions/HR capability and just wanted a simple DIY scheme that anyone could administer.
I ran our company's NEST scheme until retiring a few years ago.
Originally it was slow to allow any of the Osborne pension freedoms, and you couldn't transfer other pensions in or out, and it didn't do drawdown etc. But I think this may have changed recently.
You do get a choice of funds with different risk factors.
One thing to beware of is that if you draw any money from any pension you are thenceforward severely limited in the size of any future contributions you can ever make to any scheme.
Last edited by: Cliff Pope on Sun 19 Aug 18 at 15:57
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Cliff, very interested in your last point. I know you can't offer specific advice but in general how does this affect people who still work and contribute to a scheme with age 66 retirement but have prior schemes (not yet drawn) from other employers with an age 60 retirement?
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If you earn more than £3600 a year then you can't contribute more than your earnings in any case. There is also an annual allowance of maximum £40,000. If you are using or have used flexi-access drawdown (as opposed to the old GAD drawdown) or taken an UFPLS (see above) then your annual allowance is reduced to £4,000 IIRC (was £10,000).
There's also a tapering reduction of the £40,000 allowance for those earning over £150,000pa.
If you have lifetime allowance protection then you cannot make any further contributions at all. The current LTA is £1000,000 (benefits taken, not contributions made.
Not sure what Cliff was referring to, probably the £4,000 limit above. As far as I know it doesn't apply to having taken DB benefits or annuity purchases, just the "now" drawdown arrangements.
Again from memory, E&OE.
Everybody should check their own specific situation, it gets complicated trying to generalise, and I'm not an adviser, just somebody with 5 pensions (2 x DB, 1 x S32 Buyout, a SIPP in drawdown, and the State Pension!
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>>
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>> Not sure what Cliff was referring to, probably the £4,000 limit above. As far as
>> I know it doesn't apply to having taken DB benefits or annuity purchases, just the
>> "now" drawdown arrangements.
>>
Something like that. I don't know the details, just that there are minefields in this area.
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Thanks for the feedback.
Multiple pensions with different age criteria, while not the norm, are hardly rare. Its a shame there isnt clear govt advice online.
I will speak to our finance advisor to see if his firm can offer advice..............or buy a mine detector!
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Just phoned the provider for Victim Support - worked there for 18 months more or less. Cashing my pension in will net me £2.5k - first 25% free of tax the balance being taxed at basic rate. What a good deal. Shiny kit beckons.
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>> first 25% free of tax
>> the balance being taxed at basic rate. What a good deal.
Your marginal rate, surely?
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A Pensions Question - R.P.
