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New pension rules
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Hyperian
Posts: 6 Forumite
I have a small private pension, which is currently worth around 42K. Hopefully, it'll be worth more by the time I have access to it.
I'm 50 and and currently undecided whether to withdraw money from it under the new rules when I reach 55.
As I understand it, i can withdraw 25% of it as a tax free lump sum and then pay tax on the balance if I decided to withdraw everything.
Would it be possible to withdraw 25% each tax year as a tax free lump sum until the pot is exhausted ?
Any advice would be appreciated.:beer:
I'm 50 and and currently undecided whether to withdraw money from it under the new rules when I reach 55.
As I understand it, i can withdraw 25% of it as a tax free lump sum and then pay tax on the balance if I decided to withdraw everything.
Would it be possible to withdraw 25% each tax year as a tax free lump sum until the pot is exhausted ?
Any advice would be appreciated.:beer:
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Comments
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I have a small private pension, which is currently worth around 42K. Hopefully, it'll be worth more by the time I have access to it.
I'm 50 and and currently undecided whether to withdraw money from it under the new rules when I reach 55.
As I understand it, i can withdraw 25% of it as a tax free lump sum and then pay tax on the balance if I decided to withdraw everything.
Would it be possible to withdraw 25% each tax year as a tax free lump sum until the pot is exhausted ?
Any advice would be appreciated.:beer:Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
I'm 50 and and currently undecided whether to withdraw money from it under the new rules when I reach 55.
What is it about the new rules that make you think drawing it all at 55 is a good idea?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Would it be possible to withdraw 25% each tax year as a tax free lump sum until the pot is exhausted ?
No, but if you have retired at age 55, you can draw around £10k each year and not pay tax as you'll be within your personal allowance.
If you won't have retired at age 55, why on earth are you wanting to start drawing down your pension?
It's sat there in a tax protected environment, invested in whatever assets you want from a very large range, protected from creditors, and outside your estate for IHT purposes.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
What is it about the new rules that make you think drawing it all at 55 is a good idea?
I was thinking the same thing. All of a sudden everyone wants to retire at 55 or draw it all out.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
There's nothing wrong with retiring early, if you've planned ahead and made provision,
What is rather silly is -
1) Drawing down your pension so quickly that you pay loads of unnecessary tax.
2) Drawing down your pension and blowing the money rather than ensuring it funds your entire retirement.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
You will in all likely hood, live 30 years or more after age 55.
If you draw it all down then, what will you live on later?
Lets face it, 42K isn't that great. You need to pay more into your pension as you still have time. If your mtg is paid off, and you have a good savings safety net, think about (while you still have income) putting some of your savings and investments into your pension to get the boost of TR.0 -
I was thinking the same thing. All of a sudden everyone wants to retire at 55 or draw it all out.
You can see some people drawing the money out, paying tax and then putting it in their bank. Not realising what they are doing is wrong.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
But doesn't that show distrust of government and financial services as much as ignorance?I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I see no indication that the OP is planning to retire at 55, but is presumably talking about withdrawing the money starting from 55 simply because they can!0
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gadgetmind wrote: »But doesn't that show distrust of government and financial services as much as ignorance?
I don't think they are mutually exclusive. It's right to take account of legislative risk, and to be wary of charges and fees. However, doing something monumentally tax-inefficient and counter-productive is not a rational way of protecting yourself against them.
The reckless spending risk of the budget reforms is overplayed. The greater (but more subtle) risk is people making well-intentioned but irrational decisions that cost them far more in the long-run than the worst annuity rate or the biggest rip-off charge ever would.I work for a financial services intermediary specialising in the at-retirement market. I am not a financial adviser, and any comments represent my opinion only and should not be construed as advice or a recommendation0
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