Small Pots

Question 1

What is a ‘Small Pot’?

Answer 1

A small pot is a pension pot worth £10,000 or less. You can take a small pot lump sum to cash out the money in one go.

You can do this three times (up to £30,000 total) and it won’t affect your lifetime allowance or your pension annual allowance.

Question 2

What is the minimum age to use ‘Small Pots’?

• A. 55
• B. 65
• C. 66
• D. 75

Answer 2

A. 55

Question 3

How many small pot lump sums can you take from personal pensions?

A. 2
B. 3
C. 4
D. 5

Answer 3

B. 3

You can usually take up to three small pot lump sums from different personal pensions.

Question 4

How many small pot lump sums can you take from workplace pensions?

• A. 3
• B. 5
• C. 10
• D. Unlimited

Answer 4

D. Unlimited.

You can take unlimited small pot lump sums from different workplace pensions.

Question 5

True or False.

25% of the lump sum is tax-free, and the remaining amount is taxed at your marginal rate of income tax.

Answer 5

True.

Question 6

Example:

Lisa (58) has the following;
* Standard Workplace Pension (£350,000)
* Personal Pension Plan (£58,000)
* Group Personal Pension (£7,000)
* Stakeholder Pension (£3,400)

How many of these plans can be classed as a small pot?

Answer 6

2.

Group Personal Pension & Stakeholder Pension as both below £10,000.