Already in capped drawdown

keetch54

I am in capped drawdown and have already taken my 25% lump sum.
My next review was due in May 2016
Question is will I be able to take whatever I wish from my remaining capital in the pension ( albeit taxed at marginal rates) from April next year having already taken the tax free 25%, or would it still be restricted?

OldBeanz

You will be able to take as much as you want of the remainder but pay tax at your marginal rate.

enator

Has that been confirmed yet? I thought it was one of the issues up for discussion over the next 12 months.


I have a capped drawdown already & can take another, but was going to wait & see if they will be allowed to go to fully flexible.

dunstonh

Question is will I be able to take whatever I wish from my remaining capital in the pension ( albeit taxed at marginal rates) from April next year having already taken the tax free 25%, or would it still be restricted?

We dont know. There has been nothing published yet that confirmed existing crystallised pensions will be moved into the new rules or whether they will remain on the existing rules. The changes to the GAD limits confuse the issue as why change them if you are going to treat existing the same as new.

BLB53

Question is will I be able to take whatever I wish from my remaining capital in the pension ( albeit taxed at marginal rates) from April next year having already taken the tax free 25%, or would it still be restricted?

From April 2015, capped (and flexible) drawdown will be effectively made redundant as they will be replaced by the new more flexible drawdown rules which will mean there will no longer be any limits on the amounts we can withdraw from our pensions. These amounts after the 25% tax free lump sum will be taxed at marginal rates - for most people 20% - rather than the 55% which has existed to date.

As a temporary measure, the limit for capped/income drawdown will be increased from 120% to 150% from next week 27th March. The amount of secured pension for flexible drawdown will be reduced from £20,000 to £12,000.

SallyG

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/294795/freedom_and_choice_in_pensions_web_210314.pdf
"3.22 Under the new system, those who have already purchased an annuity will remain bound by the contract they have made with their annuity provider. However, those who are currently in drawdown should be able to benefit from these reforms, both in the short term through the immediate increase in the capped drawdown limit, but also in the longer term through the new, more flexible tax system."

That's the only official statement I've found so far that mentions people already in capped drawdown - "should" benefit is a bit less reassuring than will benefit?

Will my capped drawdown provider with a signed contract willingly provide these new conditions?

kidmugsy

SallyG wrote: »

3.22 Under the new system … those who are currently in drawdown should be able to benefit from these reforms, both in the short term through the immediate increase in the capped drawdown limit, but also in the longer term through the new, more flexible tax system.

That's the only official statement I've found so far ...

Good find; thank you. What I hope for is that the restrictions I accepted when I signed up for Flexible Drawdown will be swept away, so that I could contribute to pensions again. Mind you, I could understand if they weren't, and I wouldn't complain.

enator

SallyG wrote: »

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/294795/freedom_and_choice_in_pensions_web_210314.pdf
"3.22 Under the new system, those who have already purchased an annuity will remain bound by the contract they have made with their annuity provider. However, those who are currently in drawdown should be able to benefit from these reforms, both in the short term through the immediate increase in the capped drawdown limit, but also in the longer term through the new, more flexible tax system."

That's the only official statement I've found so far that mentions people already in capped drawdown - "should" benefit is a bit less reassuring than will benefit?

Will my capped drawdown provider with a signed contract willingly provide these new conditions?

Thanks from me as well. As the new rules are not starting until next April, I simply will not take the risk of crystallising my 2nd SIPP before then. "Should" from a politician often means "actually, no"

SallyG

About that 55% tax on what's left in the drawdown pot when you die unless you have spouse.....
Scottish Widows website says:
"The government will also consult on options to simplify the
dependants pension scheme rules. Their aim is to ensure these
are applied fairly and reduce administrative burden.
A particularly controversial issue related to pension death
benefits has been the 55% tax charge applying to certain
benefits in payment or post 75. The government now thinks this
may be too high and is committed to reviewing these rules."
Why can't I just leave it as pension to my kids?

Linton

SallyG wrote: »

About that 55% tax on what's left in the drawdown pot when you die unless you have spouse.....
Scottish Widows website says:
"The government will also consult on options to simplify the
dependants pension scheme rules. Their aim is to ensure these
are applied fairly and reduce administrative burden.
A particularly controversial issue related to pension death
benefits has been the 55% tax charge applying to certain
benefits in payment or post 75. The government now thinks this
may be too high and is committed to reviewing these rules."
Why can't I just leave it as pension to my kids?

Perhaps it then ceases to be a pension and starts to become a means of avoiding IHT?

mania112

OldBeanz wrote: »

You will be able to take as much as you want of the remainder but pay tax at your marginal rate.

That hasn't been confirmed.

We don't yet know the answer.