Accessing tax free sum

crimsoid

Is it possible to drawdown a tax free amount from a pension every month?
What I'd like to do is reduce my working hours and take a monthly tax free amount from my pension pot to make up for the reduced income. If I understand correctly this would also mean paying less income tax.
Using round numbers: with a pot of £200K I could take £50K as a one-off TFLS.
Could I instead draw on it at the rate of £10K per annum, leaving the rest invested?

If it's not possible to take a monthly amount then could I take a lump sum annually, put it somewhere that it generates some return and access it as required?

kuratowski

The short answer: You can only take 25% of your pot as a tax-free lump sum. Anything else you take is taxed at your marginal tax rate.

EDIT: For more see w w w dot moneyadviceservice.org.uk/en/articles/options-for-using-your-pension-pot

Paul_Herring

The google terms you're after are 'phased drawdown' or 'phased/partial crystallisation.'

Essentially you start off with your untouched pot, and 'slice' off a bit each month/year, withdraw the 25% TFLS from that slice and keep the remaining 75% in what is essentially a different pot within your pension fund (to signify that the TFLS has been taken.)

It's the 'Non-taxable income' line in the grid at http://www.aviva-for-advisers.co.uk/adviser/site/public/products/aviva-platform/income-drawdown

Using your question in your last para, for example, you could crystallise 1/5th of your pot the first year, 1/4 of the remainder the next, 1/3 of the remainder the next...

I'd imagine you could do it on a monthly basis instead...

crimsoid

Thanks - what I want to do is exactly what you said in your 4th sentence.
After 5 years the remaining pot should have grown a bit and I have a deferred DB pension that I will be able to draw upon.