Scottish Widows Pension , stay or go ?

A question about : Scottish Widows Pension , stay or go ?

Morning Everyone ,

I have approx. Ј27K in a Scottish Widows pension scheme , over the last few years it has increased in value reasonably . I am aware that should I wish to I can ask an IFA to take the money from there and invest somewhere else that may be more productive. I have 6 years until I am 55 , has anyone else done this and is it worthwhile or do the charges outweigh the potential ?

TIA

Best answers:

• There are two reasons to transfer:
  1. to get access to investments not available where you are. This one only applies if you have some idea of what you want to use that you aren't using.
  2. to get lower costs.
  A transfer could achieve both of these things.
  Age 55 is useful because subject to limits you can take the 25% tax free lump sum and recycle it into more pension contributions to get tax relief again. Those on low enough incomes who would never make pension contributions above Ј10k can also recycle the income, accepting the cut in the annual pension contribution allowance from Ј40k to Ј10k that comes when more than the 25k is taken.
  At 55 you also have the advantage that the money is no longer locked up, so you may need to keep less money outside a pension for contingencies.
  For these reasons age 55 is very significant even if that isn't your targeted retirement age, since it allows you to increase the efficiency of your pension contributions.
• An interesting insight jamesd.
  If I had say Ј65k PCLS and left the remainder invested in SW, I could (using previous years allowances) reinvest to a SIPP get 20% added by HMRC or am I over simplifying your response?
  I also understand that if no pay was received due to full retirement, I could still add Ј2880 to my pot in subsequent tax years to boost tax relief!
  TIA
• Yes, that's right, though you do need to consider the lump sum recycling limit. from next year there's an easy to comply with limit of Ј7,500 of tax free lump sum taken per year (12 month gap, not tax or calendar years). So you'd just take the money in stages at that rate to get it done if none of the other recycling rules lets you go over that.