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

warddru0455

Hello can some one please clarify the new pension rules. I have been browsing the Governments advisory documents and want to know if it is possible to withdraw total pension pot without incurring tax above the basic rate. Not bothered if it occurs over several years.
I am addamant I want to be the master of my own destiny. Run my own business for 25 yrs and skeptical of Banks/Financial services being independent.

Age 59
Pension pot 135000
Take max tax free lump sum immediately.

Truthseeker_2

warddru0455 wrote: »

Hello can some one please clarify the new pension rules. I have been browsing the Governments advisory documents and want to know if it is possible to withdraw total pension pot without incurring tax above the basic rate. Not bothered if it occurs over several years.
I am addamant I want to be the master of my own destiny. Run my own business for 25 yrs and skeptical of Banks/Financial services being independent.

Age 59
Pension pot 135000
Take max tax free lump sum immediately.

If you withdraw the whole pot you will be liable for tax as if this was your income (or part of it) for the year. So the normal tax thresholds will apply.

Maybe if you reside overseas you could avoid this - not sure.

warddru0455

Truthseeker wrote: »

If you withdraw the whole pot you will be liable for tax as if this was your income (or part of it) for the year. So the normal tax thresholds will apply.

Maybe if you reside overseas you could avoid this - not sure.

Hi Truthseeker,
The idea was to withdraw the difference between my current income and the 40% tax threshold each year till the pot is depleted. Only just started looking at getting my money back and was hoping this was a game changer.!!!!

Truthseeker_2

warddru0455 wrote: »

Hi Truthseeker,
The idea was to withdraw the difference between my current income and the 40% tax threshold each year till the pot is depleted. Only just started looking at getting my money back and was hoping this was a game changer.!!!!

Well you could do this, but you will deplete your pension pot. With drawdown you would be able to do this anyway, so there is no dramatic change. The main benefit is that there will no longer be a limit on drawing down.

An annuity may still be the better option.

Kayak10

Can anyone tell me if the changes announced in the budget this week are ONLY for new annuities and NOT for existing annuities
I have two separate ones value about £60.000 taken out around three years ago

Zelazny

Kayak10 wrote: »

Can anyone tell me if the changes announced in the budget this week are ONLY for new annuities and NOT for existing annuities
I have two separate ones value about £60.000 taken out around three years ago

If you've already purchased the annuity, then this will not affect you. You've paid for a product, and there is no longer a "pot" of money to draw down.

lvader

Truthseeker wrote: »

Yes - this change is not a giveaway, despite all the hysterical comments that some people have posted. It is not a 'game changer'. If the government had made the whole pot tax free, then that definitely would have been a game changer!

It will allow some people to retire much earlier than they might have been otherwise, so it is a game changer.

System

Presumably the ability to draw down as much as one likes would apply to in-specie payments too?
So a commercial property in a SIPP could be transfered in portions over time, subject of course to marginal income tax rates?

Linton

lvader wrote: »

It will allow some people to retire much earlier than they might have been otherwise, so it is a game changer.

Yes but the current GAD limits are pretty reasonable, even generous, given a requirement to provide a stable income until death. Raising or removing the limit doesnt give you extra money, it simply changes when you can spend it. So I believe there is a real danger that people who dont understand the mathematics of life expectancy and taking money from an investment could run into great difficulties in later life.

Linton

Clifford_Pope wrote: »

Presumably the ability to draw down as much as one likes would apply to in-specie payments too?
So a commercial property in a SIPP could be transfered in portions over time, subject of course to marginal income tax rates?

Presumably this is a matter of what the SIPP providers are prepared to offer rather than government rules. Its not my field but surely there could be costly complications with a property that is owned by what legally are two different people, you and your SIPP, and having a drip feed from one to the other.