Access to Retirement Plan

harlequin55

Having retired 2 years ago I have been receiving income from my ex employers define benefit (DB) scheme and also taking drawdown income from their defined contribution (DC) scheme. Whilst working I was also contributing to a stand alone SIPP. On retirement the DC and SIPP pots were put in the hands of a wealth management company. When payments commenced I took the 25% tax free element from the DC scheme as a lump sum but have not touched the SIPP pot. My question is whether I can also now take a 25% tax free lump sum from the SIPP pot? Advice from the wealth management company is that 25% of any withdrawals from the SIPP pot will be tax free but the remaining 75 % of any withdrawal will be taxed. There seems to be a lot of confusion out there with the new pension rules and I am therefore interested in the understanding of others on this point.

dunstonh

My question is whether I can also now take a 25% tax free lump sum from the SIPP pot?

yes as it is uncrystallised.

Advice from the wealth management company is that 25% of any withdrawals from the SIPP pot will be tax free but the remaining 75 % of any withdrawal will be taxed.

Correct

There seems to be a lot of confusion out there with the new pension rules

Why are you paying for advice but not listening to the advice?

harlequin55

Dunstonh, thanks for that quick response. Maybe I have not explained myself clearly, so best perhaps to illustrate with numbers. Say the SIPP pot is £100k and I wanted to withdraw £25k. I have been advised that 75% of that sum would be taxed and that the £25k would not be treated as the 25% tax free part of the pot. This seems to differ from the approach to the DC pot where I was able to take an initial 25% tax free lump sum.

jem16

harlequin55 wrote: »

Dunstonh, thanks for that quick response. Maybe I have not explained myself clearly, so best perhaps to illustrate with numbers. Say the SIPP pot is £100k and I wanted to withdraw £25k. I have been advised that 75% of that sum would be taxed and that the £25k would not be treated as the 25% tax free part of the pot. This seems to differ from the approach to the DC pot where I was able to take an initial 25% tax free lump sum.

You can do both ways. Nothing has really changed. One way is full drawdown and the other is phased drawdown. Just make it clear which one you want.

You can crystallise the whole pot and take the £25k lump sum tax free with nil income. When you later take the rest all of it would be taxable.

Or you could crystallise only £25k, take £6.25k tax free and £18.75k taxable. As the remaining £75k is uncrystallised you can still have further tax free lump sums.

harlequin55

Thank you Jem16. The advice I was given suggested that I couldn't crystallise the whole pot and take the 25% tax free lump sum. Time now for a further discussion with the advisor. Thanks again!