What are the full options for a DC Pension Pot?

jz5ccn

The headlines seems to be that we no longer need to buy an annuity and can withdraw what and when we like. But as always I'm finding it difficult to grasp the details particularly with respect to minimising tax.

Is the 25% tax free lump sum a once only option or can I withdraw 25% each year tax free?

Take for example a 100K fund. If I understand correctly as soon as I reach 55 I can take 25% tax free and assuming no other income a further amount equal to my personal allowance (lets say 10K for simplicity).
Can I then take another 25% + personal allowance the next year tax free? So assuming nil growth in fund:
Year 1: withdraw 35K tax free
Year 2: ~25K tax free
Year 3: ~20K tax free
Year 4: ~15K tax free
Year 5: Reminder (<10K) tax free.

What I'm actually thinking of is using my AVCs as a bridging pension from age 55 to age 65 (when my final salary pension kicks in). If I can withdraw ~20K per annum tax free then I think the Chancellor has just provided a route to my early retirement:T.

Thoughts, answers comments are welcome.

CLAPTON

jz5ccn wrote: »

The headlines seems to be that we no longer need to buy an annuity and can withdraw what and when we like. But as always I'm finding it difficult to grasp the details particularly with respect to minimising tax.

Is the 25% tax free lump sum a once only option or can I withdraw 25% each year tax free?

Take for example a 100K fund. If I understand correctly as soon as I reach 55 I can take 25% tax free and assuming no other income a further amount equal to my personal allowance (lets say 10K for simplicity).
Can I then take another 25% + personal allowance the next year tax free? So assuming nil growth in fund:
Year 1: withdraw 35K tax free
Year 2: ~25K tax free
Year 3: ~20K tax free
Year 4: ~15K tax free
Year 5: Reminder (<10K) tax free.

What I'm actually thinking of is using my AVCs as a bridging pension from age 55 to age 65 (when my final salary pension kicks in). If I can withdraw ~20K per annum tax free then I think the Chancellor has just provided a route to my early retirement:T.

Thoughts, answers comments are welcome.

25% is a once off option

Seabee42

There are some interesting terms and the real details is not available yet but the 25% tax free is an old rule and once you have taken the 25% that pot counts as vested. If you invest new money in you can take 25% of the new money part.

The implication is you take the rest with tax at your variable rate (presumably counting the amount as income in that tax year). Then the money is in your hands to spread over how ever long you want to spend it.

lvader

CLAPTON wrote: »

25% is a once off option

If you had 4 pension pots couldn't you take the 25% from one pot at a time each year for 4 years?