New pension rules

haulyfryn

From April I want to draw 25% each year from my pension plan an tax free. I have been told that this is possible but cannot find any companies that will let you do this. The company I am with (Guardian) say they have no provision for this to happen, so I have been looking for an alternative. Does anyone know now of any providers that will let you do this under the new rules?
I am fully aware that my fund will run down quickly, but I want to have the benefit of the money while young enough to enjoy it.

It seems to me that providers are not geared up ready for the changes and could leave the door wide open for the fraudsters.

Linton

haulyfryn wrote: »

From April I want to draw 25% each year from my pension plan an tax free. I have been told that this is possible but cannot find any companies that will let you do this. The company I am with (Guardian) say they have no provision for this to happen, so I have been looking for an alternative. Does anyone know now of any providers that will let you do this under the new rules?
I am fully aware that my fund will run down quickly, but I want to have the benefit of the money while young enough to enjoy it.

It seems to me that providers are not geared up ready for the changes and could leave the door wide open for the fraudsters.

The delay has been due to the industry waiting for the government to announce the implementation details. Without those no one can commit to anything. I would expect the standard major online brokers to be very quick in offering the new flexibility.

torbrex

As long as you remember that after the first 25% everything else is classed as taxable income.

Paul_Herring

haulyfryn wrote: »

From April I want to draw 25% each year from my pension plan an tax free.

To re-iterate the point above, only 25% of the total fund value is tax free for all time.

You could take out 25% in the first year tax free.

If you take 25% of what remains (25% of the remaining 75%) in the next year, all of it is considered taxable income and will attract income tax at marginal rates (once other income such as salary and/or state pension have been added to the mix; i.e. 0%/20%/40%/45% depending on which bands that money falls into.)

dunstonh

I have been told that this is possible but cannot find any companies that will let you do this.

That is because it is February 2015 and the new rules dont come in until April 2015.

The company I am with (Guardian) say they have no provision for this to happen, so I have been looking for an alternative.

You wouldnt expect them to implement the new methods on their legacy pension book.

Does anyone know now of any providers that will let you do this under the new rules?

Virtually all of those open for new business will, once we get to April.

It seems to me that providers are not geared up ready for the changes and could leave the door wide open for the fraudsters.

They are geared up for it. You are just trying to do something that is not yet possible.

atush

While you are young enough to 'enjoy it'? Sorry but that is not what pensions are about or for. They are to help you live in some sort of comfort when you are older. You do realize you could live to over 90?

Do you honestly want to work forever? Until you drop? Or live in penury?

Do you honestly want to pay tax at your highest rate (or even Higher rate tax if the 25% puts you above 42K?) on your remaining 75% pension pot? Do you need/want to spend it so badly you'll be happy to hand over a huge chunk of it to the taxman?

Madness really.

kidmugsy

atush wrote: »

While you are young enough to 'enjoy it'? Sorry but that is not what pensions are about or for. They are to help you live in some sort of comfort when you are older. You do realize you could live to over 90?
...

Madness really.

Don't fret, atush; many of the people who rush to draw out their pension money have every confidence that later in life they'll be allowed to freeload on their fellow citizens. Moreover, they will be proved right.

mgdavid

kidmugsy wrote: »

...... they'll be allowed to freeload on their fellow citizens. Moreover, they will be proved right.

and of course that's why we fret; the logical sequel being the risk of our tax rates increasing to pay for it.

xylophone

With regard to the 25%:

http://www.thisismoney.co.uk/money/pensions/article-2792180/savers-25-tax-free-multiple-pension-lump-sums-three-big-pension-changes-need-know-about.html

"Up to 25 per cent can be taken tax free, either in one lump sum, or as the first 25 per cent of multiple lump sums.

Income tax will be charged above that tax-free element on sums withdrawn at a level set by adding the amount taken out to an individual's standard income."

Bobl

mgdavid wrote: »

and of course that's why we fret; the logical sequel being the risk of our tax rates increasing to pay for it.

Chill out guys, not everyone is thinking of taking it all now and leaving themselves penniless later.

For instance, when I left the Army I had no idea how my civilian career would go so I took out an additional private pension that is due to mature soon. I am lucky enough to have a full Military Pension plus a very generous Final Salary Pension with my current employer that will more than provide for us. The additional pension will only pay a very small monthly amount so I am looking into taking lump sums each year if that is possible.

Interesting link to the 25%, I though it was 25% tax free each year. Oh well back to the drawing board!

Paul_Herring

Bobl wrote: »

I though it was 25% tax free each year.

If you don't take the 25% tax free lump sum of the whole fund up-front, that is how you can (apparently) do it - get 25% of your withdrawals tax free.


Unfortunately this subtle point isn't made often enough when the media talks about it...

Option 1: Take the whole 25% TFLS up front, pay income tax (at your marginal rate) on any withdrawals thereafter.

Option 2: Don't take the TFLS up front, and only pay income tax on 75% of each and every withdrawal until you die (or they change the legislation.)


However confusion reigns when people conflate the two, and think that they can get 25% tax free of any remaining fund (like they can do in the first year) for every year there is a fund to withdraw from.