Take tax free at 55

aayush

Hi

I wish to ask if I can ask for the above ? on my pensions
As one of them say I can not but am sure this not correct?
As you want to enjoy what u paid in the pension and leave rest for a rainy day

zagfles

What kind of pension? What's your age?

aayush

personal pension and age is 55

zagfles

Then yes. If the personal pension provider won't allow it then you can transfer to somewhere that does. If the pension has valuable guarantees (eg guaranteed annuity rate) and is over £30k you might need advice, but most don't.

Linton

What kind of pensions are they? Defined Benefit (eg final salary) or Defined Contribution where you accumulate a pot of money for your retirement? With DB pensions you can only take the tax free lump sum when you take the whole pension.



I will assume they are DC. The law does not prevent you taking all or part of the pension at 55, so you can take the Tax Free Lump Sum. However not all pension schemes support this because they dont have the software or organisation to manage it. This is likely to be the case with employer schemes or old personal pensions.


If your scheme wont allow you to take the TFLS you can transfer the pension to another scheme that does allow it. However some employer schemes may not let you transfer a pension whilst you are still an active member of the scheme. Also if your scheme has guarantees and is over £30K you can only transfer after receiving advice from a suitably qualified IFA.



So you can do it, possibly with some effort. However do you really want to? Generally speaking it is a bad idea to take money out of a pension before retirement without a very good reason. Just because you can is not a very good reason.

aayush

zagfles wrote: »

Then yes. If the personal pension provider won't allow it then you can transfer to somewhere that does. If the pension has valuable guarantees (eg guaranteed annuity rate) and is over £30k you might need advice, but most don't.

the one in question I have£29k in there and the say not able to draw down?

aayush

Linton wrote: »

What kind of pensions are they? Defined Benefit (eg final salary) or Defined Contribution where you accumulate a pot of money for your retirement? With DB pensions you can only take the tax free lump sum when you take the whole pension.



I will assume they are DC. The law does not prevent you taking all or part of the pension at 55, so you can take the Tax Free Lump Sum. However not all pension schemes support this because they dont have the software or organisation to manage it. This is likely to be the case with employer schemes or old personal pensions.


If your scheme wont allow you to take the TFLS you can transfer the pension to another scheme that does allow it. However some employer schemes may not let you transfer a pension whilst you are still an active member of the scheme. Also if your scheme has guarantees and is over £30K you can only transfer after receiving advice from a suitably qualified IFA.



So you can do it, possibly with some effort. However, do you really want to? Generally speaking, it is a bad idea to take money out of a pension before retirement without a very good reason. Just because you can is not a very good reason.

The plan I open and made contributions to it up till I hit hard times as job issues and family commitments

dunstonh

aayush wrote: »

the one in question I have£29k in there and the say not able to draw down?

Taking the 25% and nil income is drawdown and the plan needs to support that. If this is what you want then you would need to transfer to a modern plan that offers drawdown.

It is worth noting that some legacy plans, whilst they do not support drawdown, are able to pay just 25%. Terminology can be a bit inconsistent with providers. Others say they support drawdown but they dont offer all options. So, avoid terminology and ask them if they will pay only the 25% Tax free cash.