New pension rules

patanne

Frankly I think you are all underestimating the number of people whose greed and need for instant gratification are already calculating the best tax year to do this in order to pay the least amount they can so that they can spend the money. I don't have a large circle but I think that they are 50/50 how much can I get my pension up to / how quickly can I get my hands on the money.

gadgetmind

Stupid is as stupid does.

patanne

What has surprised me is that the brightest of the bunch is the biggest grab it now one and one of the least bright is the biggest wondering how they can maximise their pension. It is certainly going to be interesting to see what the general outcome is.

jamesd

Hyperian wrote: »

Would it be possible to withdraw 25% each tax year as a tax free lump sum until the pot is exhausted ?

That is not possible.

Once you take the 25% tax free lump sum a marker is set on the pension pot to say that its 25% tax free lump sum has been taken. You can never again take a 25% tax free lump sum from such a pension pot.

In more technical pension terminology, the pension pot becomes "crystallised" once you've taken the lump sum and you can't take a tax free lump sum from a crystallised pot.

So nice idea to take it in four pieces all tax free but that is not allowed.

Hyperian

Thanks for the advice. Some helpful but some seem to assume that I plan to retire at 55, which I don't. I cant afford to retire at 55 and never mentioned in my question that I was going to. All I was after was advice so for those who actually did answer my question then thank you.

gadgetmind

Hyperian wrote: »

I cant afford to retire at 55

So, the big question is when you're going to be able to retire.

To answer that you need to work backwards from your future needs and it's these that must guide your current and future actions. It's more than likely that you should still be paying into that pension pot now, age 55, and well beyond.

atush

Exactly my point gadget, even if the OP didn't like it.

No reason to take the pension early if not retiring. Unless you are in debt of course and therefore unlikely to be able to retire at all.

Breachwood

I am on track to retire at 60 with good (teachers) pension. If I make AVC payments for next 5 years with 40% tax relief (i.e. invest a total of £40k gross or £24k net) can I take 25% of the AVC pot at 60 tax free, and continue to make drawdowns at 20% tax thereafter i.e. pension contribution become a savings / investment scheme? i.e. £24k contribution becomes total drawdown of £34k over 5/6 years?

atush

that is a DB pension, so covered under scheme rules, not new rules.

Check your rules booklet


As a side note, to use the new rules you could open a DC pension and use that instead of AVCs