Should I take pension

hayleydaley

Just been on to them they said it is fine: bit worrying now

atush

Call HMRC, that does not sound right

hayleydaley

With what I read on here and thank you all for your help. I have put a stop on it. But will ring them back tomorrow just to make sure

hayleydaley

Me again. So after the 5th april I can take lump sums on all three of my different pensions.

jamesd

Glad you finally got them to stop, it shouldn't have been so hard, they should have recognised it as soon as you told them about the others and their values. They are supposed to know, not necessarily you.

Yes, from 6 April it's completely fine to take out as much as you like. You have two different ways:

1. Uncrystallised funds pension lump sum (UFPLS). With this way you say how much you want and 25% is tax free while the rest is treated as normal taxable income.

2. Flexi-access drawdown. 25% tax free lump sum abut you don't have to take all of the 75% at the same time. Unless you need it all as a lump sum it is better to take the 75% either as monthly payments or at least several payments because of the tax issue I mention next.

Tax treatment for this is unfriendly. If you take a lump sum and HMRC has not yet sent the pension firm a notice of coding, they have to pretend that you will take the same amount every month. That will produce a horrible tax bill. If you take out all of the money in the pension this is not too painful because you can reclaim the extra tax from HMRC immediately. If you take only part you have to wait until the end of the tax year.

For the first pension life isn't too bad. You can take it all and get the form to reclaim fro HMRC. For the second pension you would only want to take part of the 75%. So you couldn't immediately reclaim. So I suggest that you consider the UFPLS for the first one then flexi-access drawdown and monthly payments for the second one. That way the tax will have time to sort itself out on the second one with less work for you.

jem16

hayleydaley wrote: »

Just been onto them they said it is fine as I am not taking any other payments. From the other pensions.

No it's not fine. It doesn't matter whether they are in payment or not - what matters is the overall value just now until the rules change.

if that's really what you were told I would be making a formal complaint as it could have cost you dearly.

hayleydaley wrote: »

With what I read on here and thank you all for your help. I have put a stop on it. But will ring them back tomorrow just to make sure

I wouldn't bother asking them as someone clearly doesn't have a clue. If you do call them ask to speak to a manager about putting in a formal complaint.

Who is this pension company?

jamesd

hayleydaley wrote: »

I have put a stop on it. But will ring them back tomorrow just to make sure

Good. Just so you know, HMRC would have given you a penalty charge of £13,546.60 if they had continued with it.

hayleydaley

Just to make sure so after the 6th april I can take lump sums from all of the above pensions without any come back from the tax man

greenglide

hayleydaley wrote: »

Just to make sure so after the 6th april I can take lump sums from all of the above pensions without any come back from the tax man

25% tax free, 75% taxable just like other taxable income. Whether you pay tax depends on what other income you have.

atush

Plus there is the whole "Should" part of your OP. which has not been addressed.

I personally think that pensions 'should' only be taken for either retirement or if you have a burning Need (not want) for the money. Esp if you will be paying tax on it (ie the 75% bit)