Taking part of pension at 55

Albermarle

Gareth147 said:

The pension I am looking at taking 25% from is no longer being paid into, so does the balance continue to be invested or is it frozen at the point I take 25% ?

The whole pension will have remained invested ( and incurring charges ) since you stopped paying into it and will continue like that until the balance is zero .

If you do  not take the 25% tax free , then 100% will remain invested.

Gareth147

Thanks for all your comments.

Scrounger

Another option perhaps worth considering is taking your 25% and then using some of it (say, about half: <= £7,500) and pay it back into pension.

This is known as 'pension recycling' and enables repeated tax relief on the same funds.

Much despised by the treasury; I did this trick several times myself.   

As usual, @jamesd is the expert on this.

Scrounger

jamesd

£7,500 of tax free cash every rolling twelve months (not tax or calendar year) is written into the rules as not breaking them, so don't go over it unless you want to get into the more complicated ones.

I never did use it because my qualifying income ceased before I had the opportunity, in part because I was already without it at or close to the annual allowance anyway.

sevenhills

Scrounger said:

Another option perhaps worth considering is taking your 25% and then using some of it (say, about half: <= £7,500) and pay it back into pension.

This is known as 'pension recycling' and enables repeated tax relief on the same funds.

I would think about doing this with my small but growing(£13k) SIPP. But it's all invested in shares or unit trusts, so I would need to turn it into cash and then reinvest in the next pension.

It may well be worthwhile, I have until March to think about it.

Scrounger

sevenhills said:

Scrounger said:

Another option perhaps worth considering is taking your 25% and then using some of it (say, about half: <= £7,500) and pay it back into pension.

This is known as 'pension recycling' and enables repeated tax relief on the same funds.

I would think about doing this with my small but growing(£13k) SIPP.

It may well be worthwhile, I have until March to think about it.

You ideally need to be >=£30k for optimum benefit.

In your position I would leave it a while longer.

Scrounger

WYSPECIAL

jamesd said:

£7,500 of tax free cash every rolling twelve months (not tax or calendar year) is written into the rules as not breaking them, so don't go over it unless you want to get into the more complicated ones.

I never did use it because my qualifying income ceased before I had the opportunity, in part because I was already without it at or close to the annual allowance anyway.

So I could withdraw £7500. Pay it back in and get £1875 tax relief added. The deduct the total £9375 from my income for tax credit purposes?

RoadToRiches

I trust the £7,500 is the the employee contribution limit and anything above this paid by employer matching is in addition to this.