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Hello folks,
I just wondered if anyone could give me some advice regarding a small pension pot that I have, please.
Just some quick background... I currently work part-time on a low income (£15k) and also have a monthly pension of £73 net. This is a Civil Service pension which I cashed in when I was 55 (needed the extra at the time). My tax code is 1275L. I have some savings, but under £10k (it's basically emergency money, but I haven't needed to touch it in recent years - and also haven't added to it). I opted out of SERPS in 1994 and have a small pension pot with the Prudential, which is currently worth £15k. I'm 63 now and qualify for my state pension in 2026. I'm a council tenant, live within my means and currently claim no benefits. I also do not pay into any kind of employment pension scheme. I don't need a high income to live, clearly, and am happy enough on the money I receive.
I can't think that that £15k pension pot (which I can draw at 65) will yield much in terms of a monthly pension. I know the options I have on it - that I can draw up to 25% as a tax-free sum if I so wished, but any figure above that would be taxable at the usual rate. I've been thinking about cashing it all in and buying a camper-van to use when I do actually retire. There's not really any other way that I'd be able to afford one otherwise. So if I took that option, the first £3,750 would be tax-free, and I'd then pay 20% tax on the remainder - leaving me with £9k net from that.
My question is... if I take that option, is it likely to affect my taxation for the year in any way? As I see it, it would amount to my total income for the year still being below the threshold for the next tax band. In total, it would be under £28k net income. As it's a pension though, would HMRC regard it as a 'monthly pension payment' and assess it over the year in that regard - putting the total income assessment as well over £100k? I know that may sound like a daft question - the pension money would already have been taxed, after all - but I know that HMRC can work in mysterious ways with these things, and I don't want to find that they've adjusted my tax code accordingly for a higher income bracket.
I'd be grateful for any advice anyone can offer me on the subject.
Thanks in advance.
I just wondered if anyone could give me some advice regarding a small pension pot that I have, please.
Just some quick background... I currently work part-time on a low income (£15k) and also have a monthly pension of £73 net. This is a Civil Service pension which I cashed in when I was 55 (needed the extra at the time). My tax code is 1275L. I have some savings, but under £10k (it's basically emergency money, but I haven't needed to touch it in recent years - and also haven't added to it). I opted out of SERPS in 1994 and have a small pension pot with the Prudential, which is currently worth £15k. I'm 63 now and qualify for my state pension in 2026. I'm a council tenant, live within my means and currently claim no benefits. I also do not pay into any kind of employment pension scheme. I don't need a high income to live, clearly, and am happy enough on the money I receive.
I can't think that that £15k pension pot (which I can draw at 65) will yield much in terms of a monthly pension. I know the options I have on it - that I can draw up to 25% as a tax-free sum if I so wished, but any figure above that would be taxable at the usual rate. I've been thinking about cashing it all in and buying a camper-van to use when I do actually retire. There's not really any other way that I'd be able to afford one otherwise. So if I took that option, the first £3,750 would be tax-free, and I'd then pay 20% tax on the remainder - leaving me with £9k net from that.
My question is... if I take that option, is it likely to affect my taxation for the year in any way? As I see it, it would amount to my total income for the year still being below the threshold for the next tax band. In total, it would be under £28k net income. As it's a pension though, would HMRC regard it as a 'monthly pension payment' and assess it over the year in that regard - putting the total income assessment as well over £100k? I know that may sound like a daft question - the pension money would already have been taxed, after all - but I know that HMRC can work in mysterious ways with these things, and I don't want to find that they've adjusted my tax code accordingly for a higher income bracket.
I'd be grateful for any advice anyone can offer me on the subject.
Thanks in advance.
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