tax free cash

shiredeon

when you take the tax free cash element do you have to purchase an anuity at the same time or can you defer it to a later date, thanks.

Nick_C_4

Assuming you're talking personal pensions, if your particular pension plan allows it, you can designate the funds for drawdown, and take the associated tax-free cash. You don't have to actually take any income from the drawdown funds, you can just leave them invested. You can take an income from those funds, or you can purchase an annuity with them later, or a mixture of the two.

dunstonh

Done a couple of these recently. However, the provider has to agree to it. This often means transferring into a personal pension or SIPP (full or hybrid). Its not the sort of thing you would get on a stakeholder.

EdInvestor

If you wish to take the tax free cash out of a pension and leave the rest invested until you need it later, you usually need to transfer the whole pension to a SIPP and then put the 75% remaining into "income drawdown".

There may be various issues that need sorting depending on the type of pension it is and whether it has protected rights (contracted out) money in it. At present the latter can't go in a Sipp.If it's an occupational pension, it might need to be converted into a personal pension first, and this might mean your tax free cash or any guarantees would be affected.

dunstonh

Remember that you only get one bite at that cherry. If you take the 25% now, you dont get another chance later. If you are taking the money out purely to invest again, then that would not be considered a good move.

There may be various issues that need sorting depending on the type of pension it is and whether it has protected rights (contracted out) money in it.

The hybrid SIPPs allow it with protected rights.

shiredeon

i think i can take more than the 25% under the old rules as i was a high earner, hence the 90k tfc on a fund of 150k, i think it was an average of best three years earnings in ten years or something like that, however we now take a low income and take dividends instead and have done for a few years, so if i leave it too long i will only be able to take 25%, or at least that's what i think.there are no protected rights funds although i have my opted out of serps fund which i could take (50k)
(By the way i have an executive pension taken out in 1984)

shiredeon

Hi.

Your TFC on pre '87 regs is protected and wont be affected by your future earnings.




The above was posted on mottley fool, is it correct.