Pension drawn down

shinytop

They would suggest you fill your forms in with crayon, since obviously you wont be allowed to have sharp pencils and pens where you must be staying.

Are you suggesting people who lack financial skills should be in some sort of institution? Or are you making fun of people who are in one? Or both? Sorry, not funny. And as already pointed out, not helpful to the OP.

ManAtHome

AnotherJoe wrote: »

Inflation is say 3%.

The old Cheese and Plasma Index might be 3% ish, but other inflations may differ... https://www.independent.co.uk/news/uk/home-news/the-charts-that-shows-how-private-school-fees-have-exploded-a7023056.html

Apodemus

AnotherJoe wrote: »

3% or 20%? . I hope they aren't involved with working out dosages.

While I agree that taking the whole sum at once might be daft, if the balance was only going to attract 20% (which is by no means certain) and if the OP was going to have income above the personal allowance in retirement anyway, then the balance is going to be taxed at 20% (at least) whether taken now or later? So, surely it’s not as simple as a question of 3% against 20%?

kidmugsy

xylophone wrote: »

What about DB?
Accrual under defined benefits (DB) arrangements is not tested against the MPAA, but will be included in the test of total contributions against the AA/TAA:[/I]

Why do DB pensions get such kid-glove treatment? It is a riddle, wrapped in a mystery, inside an enigma.

AnotherJoe

Apodemus wrote: »

While I agree that taking the whole sum at once might be daft, if the balance was only going to attract 20% (which is by no means certain) and if the OP was going to have income above the personal allowance in retirement anyway, then the balance is going to be taxed at 20% (at least) whether taken now or later? So, surely it’s not as simple as a question of 3% against 20%?

Thats a very fair point which is impossible to resolve unless the OP reveals their salary but unless the OP is on a very low salary they are surely going to hit 40% by adding £27k to their salary this year? It seems unlikely someone on say £18k a year or lower is paying private school fees?

They are also handicapping themselves for the next ten years to staying in a DB pension, if they moved to another job with a DC pension they will not be able to take max advantage of tax relief, especially if they are a high rate taxpayer, they could potentially lose much more than the £27k sum in total merely by losing out on the extra 20% tax relief above basic.

LouisT_45

My salary is £36,000.

If I cash in the whole £39,000 pot does that mean I am will pay 40% on the remaining 75%?

Can I get evidence that the 25% tax free will come in one lump? I will be buoyed by this- I think I need to go into something called the retirement fund when I have a telephone interview which is allowed 15 days short of my 55th birthday.

Dazed_and_confused

My salary is £36,000.

If I cash in the whole £39,000 pot does that mean I am will pay 40% on the remaining 75%?

Your "salary" is often irrelevant. It is taxable pay/salary which counts and this is often lower than what people on here quote as "salary" i.e. salary £36,000 less 10% contribution into employers pension normally = £32,400 taxable salary.

But even if your taxable salary (P60 figure) was £36,000 then you are unlikely to pay 40% tax on the taxable element of the pension. In the current year the standard threshold for higher rate tax is £43,430 (or £46,350 outside of Scotland) so depending on any other taxable income you have there seems to be some headroom where 20% will be payable on some of the taxable pension amount.

LouisT_45

Great

I have a separate Occupational Pension with a salary of £36,000 and a pot of £39,000 what will I get net if cashed in one go is my question?

Dazed_and_confused

On a pot of £39,000 you would normally have £9,750 tax free lump sum and £29,250 taxable pension.

If you took the £29,250 all in one go in the current tax year the pension company would deduct £11,517.45 in tax.

It looks as though you would get some of this back feom HMRC but it's difficult to say how much without full details of your taxable income.

You might also want to think about whether taking the taxable bit all in one go is the right thing to do. Whatever the overall outcome you would definitely seem to be going to pay a lot of 40% or 41% tax.

Also, since thread started your fund has increased from £36k to £39k so it seems to be doing well invested at the minute.

LouisT_45

You are a star Dazed and Confused.

Thanks so much.

The pot is £39,000 in fact and my salary £36,000.

My real gold plated pension comes five years after-I am an MHO in the NHS.