Pension Tax Benefits - can someone check my logic here please?

Spiderham

Thought I'd made an error somewhere. Thanks for the clarification.

ceivegz

Does anyone know whether there's a limit on the 25% tax free lump sum I can take from my fund on retirement? If paying any tax, especially 40%, after retirement, I can't see any reason to never withdraw the full 25% tax free.... it just sounds too good to be true!

dunstonh

Does anyone know whether there's a limit on the 25% tax free lump sum I can take from my fund on retirement?

25% is the limit. The lifetime alloawnce of 1.5 million can come into play if your fund is at that level.

If paying any tax, especially 40%, after retirement, I can't see any reason to never withdraw the full 25% tax free.

For money purchase schemes you always take the TFC unless there is a guarnateed annuity rate and/or net position of the income is greater than the alternatives (which would typically be purchased life annuity which has a better taxation position than conventional annuity).

For defined benefit schemes, often its better not to the lump sum depending on the commutation factor.