ECJ Ruling

Loughton_Monkey

okydoky wrote: »

.......I am looking for drawdown of about £6Kpa so would I be better to forego any Tax Free Cash? I am prepared to do this as have other cash of about £150K to live on for years to come(hopefully!) with State Pension in 11 years time. My state pension projection looks OK with 30+ years contributions and forecast of about £8K pa incl serps etc.
Any observations/comments?

It seems to me very plain that you should take the tax free lump sum. Otherwise, you will eventually pay tax on all the fund one way or the other.

Or to put it another way, you take the 25% tax free lump sum. Now invest it in the same funds/investment vehicles that you use for the 75% put into drawdown (and presumably would have used for the extra 25%). This way you have all the advantages (including paying less tax to the tune of 20% of the lump sum), but none of the disadvantages on how much you can draw. Although I would point out that there could be slight differences in treatment upon your death - depending upon your estate value and whether or not you have a surviving spouse....

So it's definitely best in 'pure cash' terms to take the 25%. Only decide not to take it if you have good over-riding reasons not to.

EDIT: I should point out that potentially you could eventually suffer CGT on the 25% tax free you draw down. But (a) it is unlikely in the short term, and (b) this can be 'managed' by drip feeding into ISA's and/or simple management about the timing of taking profits....