Cashing in money purchase pension

nicholas1567

I am 60, retired. I have pensions in payment of about £30k pa (final salary linked specifically to RPI). Have also money purchase pension pot of about £300k - mostly in equities at my request - which I would like to cash in based on my own stockmarket judgment when I think the time is right. My wife and I have enough to live on with the pensions in payment but I am loath to buy an annuity with the money purchase pot, given the miserable level of current annuity rates. Accessing the pot, however, would make a real difference to our lives while we are still young enough to enjoy it. Can I cash in more than 25%? I have a vague idea that you can if you have other sources of income above a certain level, but can't find anything on this on the net. Any ideas?

Linton

nicholas1567 wrote: »

I am 60, retired. I have pensions in payment of about £30k pa (final salary linked specifically to RPI). Have also money purchase pension pot of about £300k - mostly in equities at my request - which I would like to cash in based on my own stockmarket judgment when I think the time is right. My wife and I have enough to live on with the pensions in payment but I am loath to buy an annuity with the money purchase pot, given the miserable level of current annuity rates. Accessing the pot, however, would make a real difference to our lives while we are still young enough to enjoy it. Can I cash in more than 25%? I have a vague idea that you can if you have other sources of income above a certain level, but can't find anything on this on the net. Any ideas?

Flexible drawdown is what your are looking for. Google will find you all you need to know. The down side is that the amount you cash in is subject to income tax so you may wish to spread it over a number of years.

peterg1965

My understanding is that if you have a guaranteed source of pension income (which can include State Pension) above £20k per annum, then your seperate money purchase pension pot can go into flexible drawdown. You can draw 25% tax free and the rest you can draw down as and when you wish with out limitations. However, you will be subject to income tax. You would need to be careful, from a tax perspective, how you take the money out of the pension to minimise tax. You could take it all out at once, but you would incur a significant tax charge up to and including the additional 45% tax rate, and you would also begin to lose your £9400 tax free allowance if your income exceeded £100k in anyone tax year.