this year or next year.

iambruce

I have a pension plan with a recent value of £46000 (i currently receive two very small pensions each month) and will receive my state pension november this year, not sure how the new rules work but do not want or need an annuity so would like to recieve as much as possible tax free cash, I've read this would be 25% but could I then leave the remainder as a pension without drawing any income and then the following year draw another cash tax free amount? if it would benefit to wait till next year? that would not be a problem.
Advice and guidance would be very welcome please.

bmm78

25% Tax Free Cash is the maximum for most schemes.

Everything else you take from a pension is taxable as income, regardless of whether it is taken as an annuity, drawn down from the fund, or withdrawn in full.

There doesn't appear to be anything in the new rules that is likely to impact on what is best for you. Unless you have any other sources of income not mentioned, you need this fund to last for the rest of your life, which will obviously restrict what you should take each year.

A lot of the anti-annuity sentiment at the moment is irrational, and the first port of call should always be to establish the highest annuity rate available as a benchmark and work from there. For most people with a fund value of £46,000, an annuity is still the most likely option, and requires serious consideration before being discounted.

atush

What I would do, is defer your state pension (it will grow by over 10% a year for doing so). At retirement, or just before, take your pension as a 25% TFLS and the rest in Capped Drawdown. Then in the new tax year, when you have no income apart from the SP, then take up to your personal allowance from the pension. This means the next trance will not be taxed as well, or will be taxed only a little (was you didn't say how much the other little pensions are.

You could do this another year if you like (or not), then DD the rest of the 43K as and when you need it (bearing in mind it will be taxed as part of your income)

gadgetmind

Yes, you can keep deferring your SP and drawing your other pension tax free for a few years. You'll then have more SP when you start drawing it.

However, do get some annuity quotes as it's a good option for many people.

iambruce

thanks everyone for your advice

mania112

Deferring state pension means you need to survive 10 years to recoup the lost income in that first year.

mania112

So is an opposing thought to the one the OP has of getting as much out now as possible.

iambruce

probably should included £ in pensions receiving now, upto nov 14 approx £7800 from both after nov this drops to around £5700 one pension reduces something to do with serps and retire early) no other income so would like to try to maximise my income to yearly taxable allowance

xylophone

Have you asked for a state pension statement?

both after nov this drops to around £5700 one pension reduces something to do with serps and retire early)

Can you elaborate on this?

mark5

My dads Tata steel pension (formally Corus ) worked in the same way, he finished at 60 and had a greater pension than he was entitled to at 60. This continues up until the point his state pension kicks in.
Something like 60-66, Tata pension 18,000, age 66 onwards Tata 11,000 pension plus 7000 state pension.

kidmugsy

iambruce wrote: »

... from both after nov this drops to around £5700 ... no other income so would like to try to maximise my income to yearly taxable allowance

If from November you will have £5700 p.a. occupational pensions, plus your State Retirement Pension, you'll already be using up your personal allowance for income tax (£10,500 p.a. from 06/04/2015).

You certainly can take your 25%. That leaves £34500. If you want to invest this for future income than, as atush said, the best value investment you could find will be deferring the state pension, and drawing enough of the £34500 to replace it. After about three years of that, you can start your state pension which will be 31.2% bigger (plus inflation-linking) and you'll still have cash (I expect - you do the sums) left in your pension plan.

If you want instead to withdraw all the money from your pension plan then you'd want to do that spread over a couple of years to avoid higher rate income tax.