Frequently Asked ISA Questions
Can I combine different pension pots?
Yes you can. If you’ve had more than one employer during your working life, chances are you may have paid into more than one pension scheme giving you several different pots. If you have two or more, combining them may be easier and you may get a better deal when you retire.
What’s ‘income drawdown’?
Income drawdown is a way you can take an income from the money in your pension pot without having to buy an annuity. Your money’s still invested in your pension fund, and you take amounts from it as and when you need it, subject to the terms of your contract. There may also be a charge every time you take cash.
How does an annuity work?
An annuity is an annual retirement income paid to you for the rest of your life. You can normally choose from different types of annuity including:
- An income for just yourself
- An income for yourself and a dependant, such as a partner, if you think you’re going to die before them; typically it pays a proportion of your income to them on your death (normally 50%)
- An income fixed for the rest of your life
- An income that increases every year, such as in line with inflation
- An income guaranteed to be paid for a certain period of time, say 5 or 10 years, even though you may die during this time
- An income which depends to some extent on the investment performance of the underlying assets
‘Enhanced’ annuities are also available if you have any sort of medical condition, which reflect the fact that your life expectancy might be impaired.
Do I have to buy an annuity?
No, you don’t have to buy an annuity to provide retirement benefits. But one can help to provide certainty of income for the future. You can also build in a continuing income to a surviving dependant (such as your spouse) should you die.
How much can I take as a lump sum from my pension pot, and when?
The rules on taking a cash lump sum depend on whether your pension is a defined contribution scheme or a defined benefit scheme.
Defined benefits schemes each have their own rules, but generally allow you to take a pension and cash sum, both at the same time or give you the option to exchange some of your pension for cash.
Defined contribution schemes allow you to take some or all of your pension pot as a cash lump sum, but you need to be aware of the tax implications.
As long as you don’t take more than 25% of your benefits or pot as cash, you won’t pay any tax; anything over that will be treated as income, and taxed accordingly.
Can I take money out of my pension pot before I retire?
Whichever type of pension scheme you’re in – defined benefit or defined contribution – you can usually start taking money from it from age 55. If you’re in poor health or in a profession where retirement is a lot earlier (such as a professional athlete), you may be able to start even earlier.
How can I trace a ‘lost pension’?
If you’ve been in more than one pension scheme by moving jobs over the years, it’s easy to lose track of the different pension pots you may have. Most schemes you’ve been a member of must send you a statement each year – but if you no longer get them, perhaps because of a change of address, you should contact either the pension provider, the Pension Tracing Service or your former employer, providing them with as much information as you can.
Is In The Know regulated?
Yes, In The Know is a trading style of Rex Financial Services LLP.
Rex Financial Services is directly authorised and regulated by the Financial Conduct Authority (FRN: 798939) and provides advice on products from a restricted panel of specialist providers.
How much does your service cost?
There are no costs involved in putting you ‘In the Know’ – so you’re free to start the process of reviewing your pension.
If the regulated pensions expert advises you to switch your pension(s) and you choose to accept that advice, any associated costs involved will have been outlined as part of the advice process before you make your decision to switch.
Following the review, if you choose not to switch to a new arrangement or you’re advised to remain with your current scheme, you will have incurred no costs.
What is SSAS pension?
A SSAS (Small Self Administered Scheme) is the Pension of choice for many business owners, due to its tax efficient and cascading of wealth options that are not available through any other type of pension. A SSAS is usually set up by the owner(s) of a business to benefit and can include members of their immediate family. Click here to request more information as part of your pension health check.