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1

General Discussion Area / Re: Small Pot Pensions....

« on: 02 September 2025, 18:56:44 »

On a slightly different note, my small private pension pot has almost run itself down, and as i took the 25% tax free sum when i started, i was wondering about the tax implications of either, taking the small amount left in one go, or letting it run down naturally.

Not sure what you mean by "letting it run down naturally". Are you currently taking a regular income from it? Or is it's value being eroded by charges?

Anyhow, if you take whatever remains in the pot as a single lump sum, then that value will be a treated as income in the current tax year. You will therefore pay 20%, or 40%, or 45% of the whole amount in tax, depending upon what your other income(s) is(are) for the current tax year. If whatever you take could push you over the edge into the next tax band (£50K for the 20%-40% band, or £125K for the 40%-45% band) , you'll pay some tax at the higher rate.

IMV it would be unwise to take any lump sum that would push you into the next higher tax band.

The plan always was to take small monthly income, as the original pot was quite small in real terms. But it has been helpful over the last 17 years.

The tax implications will be the same either way providing the pot value wouldn't push you into the next tax band in the year you took the lump sum. You'll always pay 20/40/45% regardless of when/how.

Unless there is a good reason for taking it as a lump sum (like there is a good OmegaB on eBay you fancy) I'd be inclined to keep taking it as a regular income until the pot is exhausted.

2

General Discussion Area / Re: Small Pot Pensions....

« on: 02 September 2025, 18:40:00 »

On a slightly different note, my small private pension pot has almost run itself down, and as i took the 25% tax free sum when i started, i was wondering about the tax implications of either, taking the small amount left in one go, or letting it run down naturally.

Not sure what you mean by "letting it run down naturally". Are you currently taking a regular income from it? Or is it's value being eroded by charges?

Anyhow, if you take whatever remains in the pot as a single lump sum, then that value will be a treated as income in the current tax year. You will therefore pay 20%, or 40%, or 45% of the whole amount in tax, depending upon what your other income(s) is(are) for the current tax year. If whatever you take could push you over the edge into the next tax band (£50K for the 20%-40% band, or £125K for the 40%-45% band) , you'll pay some tax at the higher rate.

IMV it would be unwise to take any lump sum that would push you into the next higher tax band.

3

General Discussion Area / Re: Small Pot Pensions....

« on: 01 September 2025, 19:18:27 »

So have I got this right?

My DC's are uncrytalised pots?  At the point I start to draw down, or want to take 25% tax free, it becomes crystallised?

Yes.

With the proviso that you don't have to crystallise the whole of any one pot at one time. Only the part you put into drawdown and/or take the TFLS from is crystalised.

Suppose you have a £80K pot, and want to take out £20K over the next 4 years till it's all gone. In the subsequent years you have...

[End of Year 0]
£80K uncrystallised pot.

[Start of Year 1] - you crystallise £20K of the £80K uncrystallised pot. You end up with...
£60K uncrystallised pot
£5K TFLS which you take out immediately and buy that OmegaB from eBay that you've always wanted.
£15K in a crystallised pot which you draw down as income at £1250 per month, paying whatever tax you are liable for.

[End of Year 1]
£60K uncrystallised pot
One OmegaB

[Start of Year 2] - you crystallise another £20K from the remaining £60K uncrystallised pot. . You end up with...
£40K uncrystallised pot
£5K TFLS which you take out immediately and buy another OmegaB from eBay for the missus.
£15K in a crystallised pot which you draw down as income at £1250 per month, paying whatever tax you are liable for.

[End of Year 2]
£40K uncrystallised pot
Two OmegaB's

[Start of Year 3] - you crystallise another £20K from the remaining £40K uncrystallised pot. . You end up with...
£20K uncrystallised pot
£5K TFLS which you take out immediately and buy another OmegaB from eBay for your son.
£15K in a crystallised pot which you draw down as income at £1250 per month, paying whatever tax you are liable for.

[End of Year 3]
£20K uncrystallised pot
Three OmegaB's

[Start of Year 4] - you crystallise the final £20K from the uncrystallised pot
£0K uncrystallised pot
£5K TFLS which you take out immediately and buy another OmegaB from eBay for the daughter.
£15K in a crystallised pot which you draw down as income at £1250 per month, paying whatever tax you are liable for.

[End of Year 4]
0K uncrystallised pot
Four OmegaB's, and a realisation that buying OmegaB's from eBay might not have been your greatest idea.

4

General Discussion Area / Re: Small Pot Pensions....

« on: 01 September 2025, 18:51:00 »

When I did my " retirement course" in the civil service our trainer said the most important thing is of course " living to retirement age" always remembered his words & took every penny that I was entitled to as soon as it was available to me & made sure we enjoy it, I can honestly say that I never really thought about retirement or put money aside for it but simply made sure that my employer/s provided a decent one. Retirement is great once you reach it..👍

The issue is that the civil service scheme is a Defined Benefit (aka DB, final salary or career average salary) scheme. There is no pot of money - it's paid for out of taxation. The money you paid in was NOT put into a pot reserved your you - it was pi55ed up the wall by a previous govt. That doesn't matter to you because you have a DB contract, so if they have to the current govt will just put up taxes, or borrow, or print more money to pay you whatever your contract says.

The rules for crystallising and TFLS's only apply to Defined Contribution (DC) schemes - which do have pots of money/assets assigned to the individual.

It doesn't help when people conflate DC and DB schemes because they are two completely different animals with very different rules.

5

General Discussion Area / Re: Small Pot Pensions....

« on: 01 September 2025, 18:39:36 »

So have I got this right?

My DC's are uncrytalised pots?  At the point I start to draw down, or want to take 25% tax free, it becomes crystallised?

Yes.

Plus I'm lucky enough to have a DB, so is that the same?

No.

DB's are a contract between you and whoever the provider is. There may not even be a pot of money - depends who the DB pension is with. You have a promise (contract) that says they will pay you whatever and whenever that contract says. There are thousands of different DB schemes, so its difficult to generalise since every scheme has it's own rulebook.

6

General Discussion Area / Re: Small Pot Pensions....

« on: 01 September 2025, 13:35:46 »

Can you explain crystallisation?

You have a pot of money/assets inside the pension 'wrapper'. Technically, YOU don't own it - it's held in trust for your (future) benefit. You have a large say in what happens to it, but you don't legally own the cash/assets - the trust does. Even if you go bankrupt the trust remains unaffected (because it's a separate legal entity), and none of your creditors have any claim on it. This is your uncrystalised pot.

Crystalisation can be thought of as act of removing the cash/assets from the trust/wrapper so that they do become yours to access. (This isn't actually the definition, but it's the easiest way to explain it).

At the point you crystallise some/all of your pot you can chose to take 0%-25% of what you crystalise as a TFLS.   So if you crystalise (say) £100K from a £1M pot you might end up with....

£900K Still in the uncrystallised pension wrapper/trust/pot which you can chose to crystalise some/all of at a future date or dates.
£75K Crystallised funds in a pension fund account that you can choose to access as and when you want.
£25K TFLS 

The £75K can stay with the pension co, and remain in much the same investments as it was in before it was crystalliesd. It only counts as your 'income', and therefore liable to your income tax,  as and when you transfer the money from the pension co's account to your own bank account. Whilst it remains in the crystallised pot, it can continue to grow tax free just like it did before it was crystallised. However, you cannot take any more TFLS from the crystallised funds pot EVER - even if it doubles/trebles in value. Every single penny you take out of it will be taxed at whatever income tax rate you pay.

There are many more rules - like you must crystallise everything at age 75 - but that's the jist of it.

One of the  'naughty' but conditionally legal things you can do is crystallise £100K, take the £25K TFLS, and then pay it straight back into the pension. If you're a 40% tax payer, the tax man will gross up your £25K, to (effectively) £42K, and the pension co will add that into your uncrystallised pot. So you end up with £942K in the uncrystallised pot, and £75K in the crystallised pot. Don't touch the £75K crystallised pot, rinse and repeat for a few years......There are rules and regulations on what is called pension re-cycling, but with a bit of planning you can do this perfectly legally.

7

General Discussion Area / Re: Small Pot Pensions....

« on: 31 August 2025, 00:43:23 »

From my research it's actually be advisable not to take the 25% - I'm in a simple world with just a single pension pot.

Huh? Why? It makes no difference when you take the 25% tax free. It's always tax free (well unless/until the chancellor changes the rules). I'm yet to hear a convincing reason NOT to take the full 25% TFLS from defined contribution pots.

The argument is different for defined benefit (aka DB/Final Salary) pots, because you usually have to commute some of the annual income in exchange for a lump sum. In those instances you have to work out the commutation rate. Would you prefer £10K p/a for life or £8K p/a for life and a £25K lump sum?

What I've read is that 25% is for the life of your pension, you don't need to take it in one go.

40% threshold is ~£50k

So pay yourself ~£49k from your pension pots (paying ~20% tax)

Then top up your income from your 25% tax free lump sump, say £15k over the course of the year.

So you get a £65k pension and only pay 20% tax.

You only ever pay 20% tax and over the course of your entire pension that would save far more.

It all depends on what are called 'crystallisation' events.

Say you have a £1M pot. You can.....

1) Crystallise £50K, and take 25% tax free, and then take the remaining 75% as 'income' an pay tax at 20/40/45%. You leave the remaining £950K inside the uncrystallised pension wrapper.
2) Crystallise £50K, and take 25% tax free, and leave the 75% inside the pension as 'crystallized' funds.  You leave the remaining £950K inside the uncrystallised pension wrapper.
3) Crystallise all £1M, and take 25% tax free, and leave the 75% inside the pension as 'crystallized' funds.

What you cannot do is crystallise £50K, but take 25% TFLS of the whole £1M pot. You can only take 25% of whatever you crystallise. Once it's crystallised, you can't take any further TFLS from the crystallised portion of the pot.

On the tax point, if you crystallise (approx) £66K, then the TFLS part of that will be £16K5, leaving £50K exposed to income tax. You have a £12.5K personal allowance, so will pay 20% on £37K5, which is £7.5K. Therefore, you will receive £58K5 into your bank account, and pay £7.5K tax - an effective tax rate of 12.8%.   

8

General Discussion Area / Re: Alaska summit background

« on: 15 August 2025, 23:26:36 »

Thats exactly what should happen. Apart from events in Ukraine, he has had plenty of people murdered over the years, so the Yanks could arrest him and then extradite him to the UK or any number of other countries.

Preferably nowhere that answers to the ECHR or Bejing

The USA is not a signatory to the International Criminal Court, so doesn't recognise the arrest warrants issued on Putin and others.

9

General Discussion Area / Re: Small Pot Pensions....

« on: 15 August 2025, 23:22:44 »

The illustrations given by pension companies assume all sorts of stuff that may or may not be relevant to you. The rules are set by the FCA, and mean that every company should give their illustration in a way that can be compared to others, so it's not the pension co's fault. This usually results in very low estimates based on low returns, such as annuities. An annuity provider must pay out even if you live to be 150, but the FCA assumptions are for a negative rate of return after inflation on you pot, and this means you need a big pot to sustain a small payout.

I was thinking along the lines of the "your need £40k pa for a comfortable lifestyle" type calculations, rather than the 4/6/8% growth figures on a pension pot.

Reality is, I've set my current income hitting my account to what my (index linked) DB would pay today + what a SP would pay today, and find I can live reasonably comfortable on that, and they a guaranteed income for life.  Thus I have to self fund income until I can take my DB at 60 (penalties are a tad high for taking early) and my SP at 67/68.  One of my DC's would easily cover that even with pessimistic growth, leaving my other DC for rainy day and big ticket items. Clearly the longer I work, the less I have to dip into that 1st DC.


But I can't help feeling I'm missed something

Ahh, I see. I'm not sure I'd trust those sort of predictors. I doubt they're truly representative, and the risk is that they're just there to 'scare' you into saving more for your retirement.

Only you really know what you'll need to live on in retirement. Some costs will go down - travelling to/from work, associated car maintenance etc. Other costs go up - as you age you will typically use more energy to keep your home warmer, and since you'll be home more often and for longer, the heating and leccy bills are likely to be more. Travel insurance gets more expensive for those month long world cruises to Austraila and back. I'm sure some of the old bu99ers on here can give you an idea of other things that get expensive.

10

General Car Chat / Re: Lotus Carlton coming to auction

« on: 15 August 2025, 23:06:52 »

Well - 58 cars made it out of the 60 promised, including cars from Ireland, Denmark, The Netherlands, Poland and Germany.

Talks given by half a dozen of the bigwigs responsible for the design and manufacture back in the early 90's, and 3 laps of the Hethel test track - during which one of the 58 expired in a cloud of oily smoke.

They also ran a concourse judged by the design team. I didn't win anything - even the hi-miler award went to Bruce Strachan (203K) vs my 189K. Should have fixed the odometer cog earlier. For a change Dave Franczak's car only came second.

I've just got home, so now the customary 2 week wait for a love letter from some bunch of kill-joy rozzers.

11

General Car Chat / Re: Lotus Carlton coming to auction

« on: 14 August 2025, 23:41:15 »

I do wonder, when 350bhp.is hot hatch territory today if some cars are a case of 'dont meet your heroes'.

I understand a massive chunk of value is tied up in nostalgia and image but I do wonder if it would be 'worth it'. I struggle with quite a lot of classic car pricing today. When a Ford Sierra (and not even the really quick ones) will set you back more than an Aston, I feel like I've missed something somewhere.

I think what made the LC special is, even today, it's not short on power, and there were no real compromises, its a big, comfy semi-exec saloon. You can hold a conversation in one at 140 (so I've heard, obviously) easier than many cars doing 40 without having to raise you voice. And its 35 years old. Thats how ahead of it's time it was.

At the time, the Granada was a crock with that old 2.8, though shortly followed by the better 2.9, Rover was doing the 800 Vitesse, and that was about it for European big execs.


Obviously, from a technology and gadget perspective, if thats your thing, its badly dated - mobile phones weren't really a thing for most people, let alone smartphone control of the car.  Looks wise from the exterior it looks like, well, a 1990s Vauxhall.


I wouldn't own one now, because I would not be able to keep it in the condition it needs to be kept in, and few remaining need to be kept tip top for the future.


A true icon.

......or torque.

419 lb ft of twist is impressive even in 2025.

This ^^^^^

People seem obsessed with BHP these days, but on most cars max BHP is usually about 4500-5000 RPM, and that's not a region you can drive comfortably in. Torque is a better measure of the driveability and acceleration available, and a nice flat torque curve from tickover to red line is much preferable to a peaky torque curve which is typical on highly tuned "max BHP" engines.

The LC is a big heavy old bus, but if your clutch will take it can supposedly do 0-60 in 5.2 seconds. That was excellent in 1990, but is perhaps less amazing today. However, IIRC 60-120 was also something like 6 seconds, and that's were the torque of the big old bus still excels. It doesn't really run out of grunt till north of 160.

I've never checked if it is actually true, but there was a tale that the LC produced more torque at tickover (or 1500 RPM?) than the 3.0L 24V engine in the GSi Carlton did at full chat. Might be bolleux though.

12

General Discussion Area / Re: Small Pot Pensions....

« on: 14 August 2025, 23:13:26 »

As an aside, I'm convinced my current calculations are wrong. Every pension planner says I need £xyz p/a income for a comfortable lifestyle.  I consider my current lifestyle to be comfortable - I'm soon off on my 3rd foreign holiday in a villa this year, so can't be grumbling.

So how come my current (heavily played about with via salary sacrifice schemes, so see how little I can live on*) income be very significantly lower than what the pension providers' calculators say, and I still feel comfortable?

I'm convinced I've missed something very fundamental


*Done it this way, as we all know you spend what is left in your account

The illustrations given by pension companies assume all sorts of stuff that may or may not be relevant to you. The rules are set by the FCA, and mean that every company should give their illustration in a way that can be compared to others, so it's not the pension co's fault. This usually results in very low estimates based on low returns, such as annuities. An annuity provider must pay out even if you live to be 150, but the FCA assumptions are for a negative rate of return after inflation on you pot, and this means you need a big pot to sustain a small payout.

Annuities do have a place for those with no appetite for risk - you are basically paying the provider for a guaranteed income, so the risk is all theirs. However, if you are comfortable with some risk yourself then you can (probably!) achieve a better outcome by using one of the more recently introduced pension freedoms like drawdown. But, if you stuff it up then you could end up penniless in your old age - which is another reason to get an IFA involved particularly if the pots are large.

13

General Discussion Area / Re: Small Pot Pensions....

« on: 14 August 2025, 22:57:17 »

I think legally you could take the combined TFLS from one pension pot, but practically, it's highly unlikely the 4 different pension providers will support/allow it. What you can do is transfer the 3 separate DC pots into one (making a single £30K pot) and then take any amount (0%-25%) of that pot as TFLS. Not sure what is gained by doing this though. Transferring the DB pot is trickier and riskier.

The DB pot can't really move.  Well, it can, obviously, but would be dumb to do so.  Also were it is has additional protections beyond the standard protection should the company go tits up.

DB pensions, especially those with enhanced features, will almost certainly need an IFA to sign off on any transfer. The receiving scheme will almost certainly refuse to accept the transfer without an IFA's approval. There are (or at least were) only a few schemes that would take it anyway - the risk of being sued by a disgruntled customer who later finds out the transfer was a very bad idea (and it usually is a very bad idea) is too great.

So technically, with the example above with the total value of DB being £10k (not P/A, remember this is a made up figure), and 3 DC's at £10k value each, I can take £10k (25% of all pensions) TFLS from ONE pot, but the logistics of doing so will be a problem?

By the time I retire, rules could well have changed so will need proper advice then, but musing around options at the moment.  It would be nice to stay long enough that my DB starts in a few short years, but I don't think I can bite my lip that long, lol.

I don't think anyone will let you take the TFLS part of the DB from a different DC pot. It's commute some of the DB annual payment for a TFLS, or don't commute and no TFLS. Basically, the DB isn't really a pot of money - it's a promise to pay you £X till you die, so it probably doesn't have a real pot of money allocated to you for anyone to know how much a 25% of it is. Actuaries can work out how much cash a company has to put into the 'pot' to pay your £X forever, but that value can vary massively day to day, week to week. YOu only 'own' the promise to pay £X.

So, I think you could take £7.5K from the 3 DC pots, and legally I think you could take it all from any one of them - assuming the provider allows it which is doubtful. But any extra from the DB would have to come out of the DB by commutation.

14

General Car Chat / Re: Lotus Carlton coming to auction

« on: 14 August 2025, 10:16:36 »

I assume that rust spreading underneath all the plastics is a concern ?

The plastics are mostly a lousy fit, so they don't tend to trap water - if anything they protect the paintwork under them from stone chips and hence rusting. The exceptions are the rear wheel arches, rear door shuts, sills and rear doors which do rust for fun - but that's true of all Carltons & Senators and even Omegas.

15

General Discussion Area / Re: Small Pot Pensions....

« on: 14 August 2025, 00:00:18 »

I'm now at an age where mine is moving away from risk into lower returns.  I guess a sensible move, as a big hit now might not have time to recover before I want to retire.

One thing worth adding is that workplace pensions do this on the assumption that you will want to be drawing from your pot on day 1 of your retirement, whenever that's defined to start. Depending on your appetite for risk, what other schemes you have, whether you'll be retiring in a big bang or dropping a few days a week for a while and so on, you might want to keep some of your investment at a higher risk until later or spread it around in other ways.

Yes, I agree with that. You might be retired for 30+ years, and you probably shouldn't have everything in low risk/low return investments (or worse cash) for 30+ years.

One strategy is to keep (about) 5 years worth of income in low risk/low return investments, and the remainder in your normal higher risk portfolio. Then 'on average' once per year transfer one years worth of normal-risk into low-risk stuff. That way if there is a big drop in your normal-risk portfolio (due for instance to a stock market crash, or Trump/Truss going on another bender), you can wait a year or three for your portfolio to recover, and then transfer a year or threes worth of normal-risk to low-risk. This way you've got  5 year buffer, and aren't forced to cash-in when the stock market is low, and you can keep a large proportion of your pension invested in stuff that can/might return 5-10% p/a.