Workplace pension

phantomtraveller1

At 67, i have decided to retire. The last 3 years ive been paying into a workplace pension. There is not enough to give a steady return, a few thousand. Since i will be no longer working. Will the withdrawal be subject to the usual 25% tax free and the rest subject to 20%? Or will the taxman be generous

xylophone

Pension Commencement Lump Sum (25%) tax free - the balance taxed as income in the year of receipt.

The Pension provider will deduct tax before paying out the pension. See
https://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/

It is unlikely to be correct in your individual position - if you have been over or undertaxed, you can contact HMRC.

Marcon

phantomtraveller1 said:

At 67, i have decided to retire. The last 3 years ive been paying into a workplace pension. There is not enough to give a steady return, a few thousand. Since i will be no longer working. Will the withdrawal be subject to the usual 25% tax free and the rest subject to 20%? Or will the taxman be generous

The taxman is neither generous nor ungenerous: you'll be subject to the same rules as everyone else. The happier news is that if you have no other income in the year you take your 'few thousand' (or not enough to take you over the personal allowance), you'll be able to claim back the tax deducted by the pension provider.

greatkingrat

Are you getting the state pension? Depending on the exact amounts, you may be better off withdrawing it over two or more years, in order to stay below the personal allowance and pay no tax.

AlanP_2

Alternative to taking it over 1-2 years would be to defer SP whilst taking this out, then restart SP in following tax year at a higher amount.