Cashing in pension across multiple pension pots.

ChrisMM662

I have 5 dc pension pots amounting to £260K. As my wife and I are thinking of buying a BnB I would like to cash in some of my pension to avoid getting a mortgage, I believe Im allowed to take 25% of my total pension pot tax free, however is it possible to take the money from only 2 of my pots a 35K pot and a £30k pot (ie close 2 of them down), reading the govermnet web site it says :-

'You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. The tax-free lump sum doesn’t affect your Personal Allowance. Tax is taken off the remaining amount before you get it."


This is implying the pension provider will only give you 25% of your pot tax free even though you havent reached your limit ??

JoeCrystal

Sound right to me. It is 25% of each pot.

Linton

Each pension pot is treated entirely separately. What you do with one pension has no effect on any other pension. You cant take the 25% tax free of one pension from another pot.

ChrisMM662

So I cant just cash in the high charge low performing pots?

Silvertabby

You can (as long as your pension plan allows it) but you can only take 25% of each pot tax free.

mgdavid

No, but you can move pots from one provider to another.
You should not have high cost low performing pots unless you have taken your eye off the ball and been remiss in not managing them.
Are you at least 55 years of age?
You could move one or more pots into a SIPP, take the 25% TFLS then actively manage the remaining 75% yourself.
Lots of options.

Although taking out a mortgage above age 55 to buy and run a B&B is not something that floats my boat, potential nightmare :eek:

dunstonh

I would like to cash in some of my pension to avoid getting a mortgage,

So, you want to lose 20-40% of your pension fund which is probably earning around 5% or so per annum on average to avoid taking a mortgage at around 2-3% which would also be a valid business expense (i.e. reducing your tax).

Do you think it is a good idea?

edit - re-read post as your thread title is wrong. Your title said you want to cash them in. i answered on that basis. However, your post goes on to say you dont want to cash them in but instead put the plans into drawdown.

atush

ChrisMM662 wrote: »

So I cant just cash in the high charge low performing pots?

You can take 25% of the total- if you transfer them all to one pot.

As this is a retirement plan, are you aware how hard it is to run a b&B?