Pensions Cash Withdrawl Tax

cloud_dog

JohnB47 said:

AlanP_2 said:

An alternative, also tax free, wopuld be to take £12,500 taxable each year + the 25% tax free element associated with that £12.5k.

If you withdrew £16,666.67 each year then 25% of that would be tax free (£4166.67) and the remainder (£12,500) taxable but within your annual alloweance.

Over 3 years you end up in the same place on your £50k example pot but provides a level income over the period.

That's interesting. I thought you had only one chance to take 25% of the pot tax free. But you're saying you can take a chunk out in more than one year and 25% of each chunk is considered tax free. Is that correct? 

It is referred to as UFPLS.  Have a look at this Prudential web page.

Albermarle

AlanP_2 said:

JohnB47 said:

AlanP_2 said:

An alternative, also tax free, wopuld be to take £12,500 taxable each year + the 25% tax free element associated with that £12.5k.

If you withdrew £16,666.67 each year then 25% of that would be tax free (£4166.67) and the remainder (£12,500) taxable but within your annual alloweance.

Over 3 years you end up in the same place on your £50k example pot but provides a level income over the period.

That's interesting. I thought you had only one chance to take 25% of the pot tax free. But you're saying you can take a chunk out in more than one year and 25% of each chunk is considered tax free. Is that correct? 

Yes, 25% of each chunk is tax free. Not all pensions / providers can support this from what I've seen commented on here (usually older schemes with older IT systems) so you may need to transfer it to a provider / pension that can support it.

So you need to check what your current provider will support. It may say on their website or you will have to call them . In some cases the provider can just transfer you to a new pension with them , or you may have to transfer to a new provider to get the withdrawal flexibility you require. Transferring a simple DC pension is actually quite easy .