Legacy small DB pension pot
Posted: April 2nd, 2024, 4:30 pm
Today I got a surprise letter about a very small DB pension pot I never new existed! It arose when I was an apprentice for less than 2 years. The scheme has somehow managed to track me down after 45 years and several moves all over the UK.
While the amounts are small I think its amazing...when I was an apprentice my pay was £50 per week in cash...I'd never felt so rich and didn't know what to do with the it, even after paying mum £10 'board'! I left my apprenticeship after less than 2 years and went to college to do A levels then on to University. I have no recollection of being in the company pension scheme and have never received any comms from them...until today.
The Fund says my annual pension is worth £640 pa from January 2028. I've asked for a transfer value and would expect that to be around £8k-£9k.
So what do I do with a small surprise pot?
I have recently fully retired but remain a higher rate taxpayer thanks to the Conservatives policy on fiscal drag, so £640 pa gross becomes £32 per month after tax.
I don't have a SIPP account (only an ISA and general investment account with no plans to touch any of it for 7 to 10 years or some unexpected emergency). I fully utilised the tax-free allowance for lump sums when I retired so there's no escaping tax whatever I do.
So I could....
1) Take the pension in 2028...but while it's a surprise, it's an irritatingly small surprise but £32 would buy me 2 good bottles of wine a month!
2) Transfer into a SIPP, which I'd have to open. I am with Interactive Investor so that would cost me £10 per month. I'd invest it until I want to draw on it. I have no plans to touch my current investments for the next 7 to 10 years and I don't need a SIPP. So a small £9k SIPP at an annual cost of £120 (1.3%) isn't great and it becomes a different type of minor irritant, albeit a nice one to have. Maybe I should buy shares in the company!
Any thoughts on my options?
While the amounts are small I think its amazing...when I was an apprentice my pay was £50 per week in cash...I'd never felt so rich and didn't know what to do with the it, even after paying mum £10 'board'! I left my apprenticeship after less than 2 years and went to college to do A levels then on to University. I have no recollection of being in the company pension scheme and have never received any comms from them...until today.
The Fund says my annual pension is worth £640 pa from January 2028. I've asked for a transfer value and would expect that to be around £8k-£9k.
So what do I do with a small surprise pot?
I have recently fully retired but remain a higher rate taxpayer thanks to the Conservatives policy on fiscal drag, so £640 pa gross becomes £32 per month after tax.
I don't have a SIPP account (only an ISA and general investment account with no plans to touch any of it for 7 to 10 years or some unexpected emergency). I fully utilised the tax-free allowance for lump sums when I retired so there's no escaping tax whatever I do.
So I could....
1) Take the pension in 2028...but while it's a surprise, it's an irritatingly small surprise but £32 would buy me 2 good bottles of wine a month!
2) Transfer into a SIPP, which I'd have to open. I am with Interactive Investor so that would cost me £10 per month. I'd invest it until I want to draw on it. I have no plans to touch my current investments for the next 7 to 10 years and I don't need a SIPP. So a small £9k SIPP at an annual cost of £120 (1.3%) isn't great and it becomes a different type of minor irritant, albeit a nice one to have. Maybe I should buy shares in the company!
Any thoughts on my options?