Pension at 55

[Deleted User]

I'm almost 52 now so not long....
I've got a few separate pensions inc a SIPP.

Am I right in saying that I can take 25% out at age 55 and pay no tax? And if I'm still working other income does not matter?

Is this a one time thing or can you then take 25% out every year?
(Yes I know its got to last).

One thing - I know theres a limit. BUT can you throw loads in the last year (when you're 54) knowing you can have 25% back in a few months (and 75% left but no tax paid on it).

At the moment, because of the way it works, anything that is not going to pension I pay employer NI, employee NI, and tax at 40%. So its a case of £100 into pension or about £45 in my hand!

Linton

[quote=[Deleted User];discussion/6094547]I'm almost 52 now so not long....
I've got a few separate pensions inc a SIPP.

Am I right in saying that I can take 25% out at age 55 and pay no tax? And if I'm still working other income does not matter?
[/QUOTE]
Assuming you have a DC pension YES you can do it. Other income does not matter.

Is this a one time thing or can you then take 25% out every year?
(Yes I know its got to last).

Taking 25% tax free "crystallises" the pension. Once a pension is crstallised you cannot take any further tax free money. However if say you had a £100K pension you could split it into 5X£20K tranches and take £5K tax free from each tranch at different times.

One thing - I know theres a limit. BUT can you throw loads in the last year (when you're 54) knowing you can have 25% back in a few months (and 75% left but no tax paid on it).

At the moment, because of the way it works, anything that is not going to pension I pay employer NI, employee NI, and tax at 40%. So its a case of £100 into pension or about £45 in my hand!

Yes you can make a large contribution in the final (or any other tax year) up to the limits. Note that the limits apply to each tax year so its best to do this in your final full year. And yes you can take out 25% tax free the following year. But best to leave it invested in the pension unless you really need the money.



It sounds like you are an employee of your own company. Perhaps you should have been making large employer pension contributions anyway to avoid much of the tax.

SonOf

Is this a one time thing or can you then take 25% out every year?

Pensions during the accumulation stage (as you are now) are known as uncrystallised. Taking the whole 25% out up front crystallises the whole pension. You do not get any tax free cash out of a crystallised pension ever again. You can draw 25% TFC from any other uncrystallised funds you have or continue to build up after that date.

Taking the 25% TFC upfront prevents you from using phased flexi-access drawdown in retirement which can be a particularly tax-efficient way to get your income and would be expected to exceed the amount paid tax free if taken up front. Also, you are effectively robbing your older self to pay your younger self. You may regret that in years to come. So, there are consequences.

Albermarle

I've got a few separate pensions inc a SIPP.

You need to check the rules with each one , as there will be more flexibility on how you can take the pension with newer pensions than older ones ( as a general rule) .
You could consider reducing the number of pensions by transferring some of them . If they are simple DC pensions this is straightforward. If they have any kind of guarantees attached to them then it would be more complicated .
Have you considered an interview with Pensionwise?
https://www.pensionwise.gov.uk/en

[Deleted User]

Linton wrote: »

Assuming you have a DC pension YES you can do it. Other income does not matter.
Taking 25% tax free "crystallises" the pension. Once a pension is crstallised you cannot take any further tax free money. However if say you had a £100K pension you could split it into 5X£20K tranches and take £5K tax free from each tranch at different times.
Yes you can make a large contribution in the final (or any other tax year) up to the limits. Note that the limits apply to each tax year so its best to do this in your final full year. And yes you can take out 25% tax free the following year. But best to leave it invested in the pension unless you really need the money.



It sounds like you are an employee of your own company. Perhaps you should have been making large employer pension contributions anyway to avoid much of the tax.

Yes I was director of my own company. I now work via an umbrella and make contribs as employer contribs.

[Deleted User]

Albermarle wrote: »

You need to check the rules with each one , as there will be more flexibility on how you can take the pension with newer pensions than older ones ( as a general rule) .
You could consider reducing the number of pensions by transferring some of them . If they are simple DC pensions this is straightforward. If they have any kind of guarantees attached to them then it would be more complicated .
Have you considered an interview with Pensionwise?
https://www.pensionwise.gov.uk/en

Yes a few years ago I did transfer a lot of small "works" pensions I'd built up over the years into one SIPP.

There was one where I couldn't or it was inadvisable...

I'll look at pensionwise.