Tax efficient way of drawing Trivial Commutation pension

Sussex_Green_Man

My wife has a small pension fund (approx value £22000) and wants to take this as cash.

She reached retirement age in late 2014 but currently still works and pays higher rate IT. She intends to retire in the middle of the 2018-19 tax year.

We understand that she can take 25% of the fund tax free but she wants to defer taking the taxable part of the fund until her income drops and then spread the withdrawls over a couple of years to take full advantage of tax allowances. Her current pension provider does not offer any form of income drawdown type pension products.

Is there a way to withdraw the money over time in a way which will not incur charges which total more than the basic rate tax liability.


Thanks in advance for any help and advice.

Linton

She can take it any any way she wishes, either 25% tax free first and then drawdown the rest as required or with 25% tax free from each part. However if her current provider doesnt provide these options she will have to transfer the pension to one that does. Transferring a small pension shouldnt be any more difficult than transferring an ISA. You will need to investigate the various providers to determine which would have least charges.

xylophone

Your wife might be interested in a transfer to the HL SIPP ? The service is efficient and the web site user friendly.

http://www.hl.co.uk/

Sussex_Green_Man

Linton - "Transferring a small pension shouldnt be any more difficult than transferring an ISA." Are you saying that she can just choose another provider and ask them to arrange the transfer for us? We had assumed that there would be some cost involved.

xylophone

Are you saying that she can just choose another provider and ask them to arrange the transfer for us? We had assumed that there would be some cost involved.

Have you read through the information on the HL site?
Has your wife asked whether there is any exit transfer charge from the existing provider?

https://www.gov.uk/transferring-your-pension/transferring-to-a-uk-pension-scheme

dunstonh

If she is still paying higher rate tax then how about adding to the pension rather than drawing on it?

Sussex_Green_Man

dunstonh wrote: »

If she is still paying higher rate tax then how about adding to the pension rather than drawing on it?

Hadn't considered this before but having read a bit more, will definitely be exploring this in the next few days. Many thanks.

kidmugsy

I trust she's deferring her State Pension?

Sussex_Green_Man

kidmugsy wrote: »

I trust she's deferring her State Pension?

Indeed she is.