MSE News: Budget 2014: Radical reforms to give greater access to pensions savings

I may be being paranoid but it occurs to me that if I have easier access to that pot of money, it might be taken into account (and taken off me) by my local authority when it comes to assessing how much I would have to pay for care in old age. Anyone got any thoughts?

Other than that I think it's the only good thing I can think of that Osborne has ever done for me.

H I am confused, by the Chancellors Budget. My wife has a very small pension, which will be paid out for the first time in 7 days time, as follow, 25% cash free lump sum and an annual annuity. Could she have with drawn the whole amount of the pension, valued at around £17,000 :think:

I am in a simular position, have a £12,000 which I can access in June this year. Could I also draw this amount in full?

Both these pensions play a minor role in our retirement plans as we have considerable NHS pensions

Regards
Dave

P.S please help if you can:money::happyhear

djt1959 wrote: »

Could she have with drawn the whole amount of the pension, valued at around £17,000

Yes, under current rules, she could withdraw all £18k (subject to 25% tax free and rest taxable) as long as she had no other pensions under the triviality rules.

Your NHS pensions will mean you don't qualify as these are worth the same as *vast* pensions pots, many many times the triviality rules.

I am just trying to get my head around these changes without getting too excited, because if the changes mean that I can get 25% of my DC pot tax free and the rest of the DC pot at 20%, that changes my retirement plans.

So..... Can I take 25% of my DC pot at 55 and my remaining pot at 20% tax? or is there a year on year limit up to the upper tax band?

Currently I pay in a fair amount into my pension on the basis that £1 in my pension is better than 60p in my hand, however if on retirement I will be able to take 25% of my DC pot tax free and the rest of it at 20%, then I will simply ramp up contributions into my pension for the next few years, take the entire pot on retirement and retire earlier than planned.

The MSE article says... "Under the new rules, you can still take 25% of your pot as a tax-free lump sum, but anything above will be taxed as regular income NOT at 55%. So if you're a basic-rate taxpayer, you'll pay 20% tax" ..... Which implies I can do as I have suggested.


The Gov website says... "you will only pay the marginal rate of income tax on anything withdrawn from a defined contribution pension" .... Which again implies I can take my whole pot DC, 25% tax free and 75% at 20% tax.

lvader wrote: »

The higher income tax rates would still apply to money withdrawn from your pension.

As a blanket statement I do not see how that can apply?

Are you saying that taking the pot all in one year would result in a higher rate of tax on the monies as they would be treated as one years earnings?

Does it then follow if instead in year one I take 25% of the pot and approx £41,000 of my pot year on year (assuming no other earnings) I would pay tax on the £41K at a max rate of 20%?