Pensions At 55

aayush

Hi

I have been advised that i can take a pot of my pension at 55 can I ask if this amount is tax free and what do I need to do as have 3 polices which 2 i froze over years ago and one which my last employer was making payments to which i have not add to due to finance issue

But want to get balance to be paid from 65 years on monthly basis but why do we have to pay tax on it has am sure it taxed when we where making payments

Linton

Assuming you are talking about Defined Contribution pensions and not Defined Benefit ("Final Salary") you can take 25% tax free once you are 55. How you access the 25% depends on the pension provider - you will need to ask them.

Money you contributed to a pension is tax free. Depending on how your employer operated the pension scheme you either werent charged tax on it at all or the tax was refunded into the pension.

molerat

It all depends on the type of pension, defined benefit (final salary) or defined contribution.

Defined benefit pensions often come with a tax free lump sum at the start and a taxable pension for life. If taken early there is often a reduction.

With defined contribution pensions you can take 25% of the fund tax free and the remainder is subject to tax. If you take the maximum tax free now the remainder, including any growth, will be taxable whenever you draw it. Your provider may or may not allow this type of withdrawal.

Money paid into the pension would (should !) not have been taxed.

aayush

Even If the 2 Polices taken out where by me and 1 is the one in to which my employer paid in to which is now frozen but is traded on the stock exchange
As get a yearly report to show how it has been doing

agarnett

It very much depends on the specific pensions yes - indeed, even the generalisation that you can take 25% tax free out of a DC plan after age 55 may not be providing all the good news that could lurk behind your own arrangements or - more accurately - inside the 'curates egg' that most of us end up with as pension shrapnel from past employments

I've got one with a total Transfer Value of £30K which has a TTFC (Transitional Tax Free Cash - as calculated at 'A Day´5.4.2006) sum of 42%! Don't ask me how that was calculated - the particular policy had not been paid into for 15 years as at 2006!

Linton

aayush wrote: »

Even If the 2 Polices taken out where by me and 1 is the one in to which my employer paid in to which is now frozen but is traded on the stock exchange
As get a yearly report to show how it has been doing

If you pay into a private pension HMRC will refund the tax into your pension. So a £400 contribution leads to £500 going into your pension. If you were a higher rate tax payer things get a little more complicated, but I assume you werent.

xylophone

An appointment with Pension Wise may help.

https://www.pensionwise.gov.uk/appointments

Linton

DuncanChalmers1948 wrote: »

You can usually take your pension income from age 55. Some people have the right to take it early if they have a special occupation or early retirement for medical reasons. Typically 25% of your pension savings is tax-free the balance is paid at marginal rate like your income when working. Some plans have enhanced tax-free cash benefits. Worth checking your plan or speaking to a specialist like Retirement Line who can do a free check. You can add your three pots together to buy an annuity or drawdown plan. As far as I am aware you do not pay tax on pension contributions hence the lack of relief on income. Best regards Duncan Chalmers.

Why do you keep refering people to RetirementLine and not to the myriad of other people who could help. Spam reported.

badmemory

He's started adding Pensionwise to his advert in the hopes we won't report the spam!

cloud_dog

I think some of the posts must be hitting the spam limit as they are..... disappearing.

Thrugelmir

Linton wrote: »

Why do you keep refering people to xxxxxxxx and not to the myriad of other people who could help. Spam reported.

Reposting the name and quoting the original post doesn't help matters. Even if the original post gets deleted by the administrators.