Private Pension

draiggoch

Just a thought but depending on how much income you have coming in from your small pensions would it be a good idea to maximise your tax free allowance with withdrawals from the private pension for the next 6 years rather than using any savings? Obviously this limits how much you can put in to the pensions in future years but could be more efficient long term.

gadgetmind

Note that even when withdrawing from pensions (which does make sense for tax purposes as above) you can put £2880 pa back in which HMRC tops up to £3600. This is £720 a year each totally free, for as long as this rule continues, but it's a big margin if you have to pay 20% tax on it. (Note 25% of the £720 tax free and then do calcs at marginal rate.)

We have DC pensions (no DB), ISAs and unwrapped savings. We're moving unwrapped into ISAs each year, leaving ISAs untouched, and drawing down *very* hard on the pensions to make best use of 0% and 20% bands before state pension trickles in.

Albermarle

ChainsawCharlie said:

Thanks for all your advice Gadget and Drag.
Funnily enough that thought crossed my mind drain, regarding spending from my taxable pension to benefit from my tax allowance, but to do this with my drawdown I need to withdraw tax free first to crystallise a pot for taxable, eg 10,000 tax free to put 30000 into taxable drawdown pot.

The normal 'trick' is to withdraw £16,666 per tax year.
£4166 tax free and £12500 taxable ( but not actually taxed if you have no other taxable income)
Of course if £16666 is not enough , you can increase it and pay some tax .

Albermarle

You need to check with Aviva regarding how flexible they are in organising withdrawals . Some older plans do not allow all retirement income options .