Pension Reform Question

Wolf2121

A fairly straight-forward question I think...

I am 55. I intend to cash in my entire pension in April 2015. Given their value, my financial situation and the taxes that would be due I seem to be in the fortunate position of not being hit with an exorbitant amount of income tax payable.

Would I be able to take the 25% tax-free cash lump sum now, and the remaining 75% in April 2015, or do I need to wait until April 2015 to do both?

Thank you.

Wolf2121

BTW I should mention that my pension(s) do not allow for 'draw-downs'. Does that make sense? Perhaps that in itself, quite simply, means "no" to my previous question? Any views? Thanks. I can check with them in the morning if there's no replies by then...

Daniel54

Wolf2121 wrote: »

A fairly straight-forward question I think...

I am 55. I intend to cash in my entire pension in April 2015. Given their value, my financial situation and the taxes that would be due I seem to be in the fortunate position of not being hit with an exorbitant amount of income tax payable.

Would I be able to take the 25% tax-free cash lump sum now, and the remaining 75% in April 2015, or do I need to wait until April 2015 to do both?

Thank you.

You will most likely be best to wait until the new financial year

Do you have any income and what is the size of your pot ?

I ask because most people at the age of 55 with little or no income and a small pension pot would not describe themselves as fortunate

Why not draw it down over time to avoid paying any tax at all ?

greenglide

If your pension provider does not allow drawdown then you may have to transfer the pension to a provider who does.

After April your provider may be more flexible over this.

If you took the 25% now you could indeed wait until April for the rest.

What do you plan to do with the money?

Wolf2121

So are you saying, greenglide, that I'd have to transfer the pension to a provider who does, simply in order to avail myself of the 25% TFCLS now rather than wait til April? Might as well just wait til April then I guess? Only 3 months away...

Pot is about £35K. Income tax would come to about £3 or £4K.

mgdavid

greenglide wrote: »

......
After April your provider may be more flexible over this.
.....

For the OP -
and then again they may not.
So you may have to transfer it to another provider in any event, before or after April.
I presume you are not working, as if you were using your PAYE personal allowance against salary the tax on the pension would be £5250.

Wolf2121

Spoke to them. Must wait until April for the entire 100%. Well less than 3 months away so no big deal I suppose. Thanks.

jem16

Wolf2121 wrote: »

Spoke to them. Must wait until April for the entire 100%.

That was obvious as the current rules won't permit it.

However I thought you were asking if you could have 25% tax-free now with the rest in April?

atush

Why do you want your pension now? what will you retire on if you do take it all and spend it now?

Wolf2121

jem16 wrote: »

That was obvious as the current rules won't permit it.

However I thought you were asking if you could have 25% tax-free now with the rest in April?

This is exactly what I was asking, but apparently given that my pension company does not allow draw-downs I would have to wait for the TFCLS AND the residual 75% until April. Yes I could transfer the pension policies to get around that but there doesn't seem much point if it's just a matter of waiting 3 more months.

gadgetmind

If you draw your pension over four years, and have no other income, then there won't be any tax. Or draw it over a longer period to "bridge" you to state pension age.