LTA - Multiple pots & PCLS

sumigo

Hi,
I currently have 3 DC pots in my Group Personal Pension - values of these are roughly 17K, 20K and 1,013K.
The first 2 smaller ports are historic and I no longer contribute to these. I still contribute to the largest pot as there is a generous employer matched contribution.
I am looking to take the 25% tax free sum when I reach 55 in the next couple of months to hopefully avoid excess LTA tax and leave the rest untouched.
Is there any particularly advantage in taking this from the largest pot or should I just spread the 25% amogst the pots ?

Thanks

dunstonh

Is there any particularly advantage in taking this from the largest pot or should I just spread the 25% amogst the pots ?

You may want to consider breaking the two smaller funds into three with less than £10k and using the small pots rule.  

Most GPPPs do not support income drawdown.  So, you may need to transfer the pensions anyway.

Albermarle

The simplest thing would be to probably transfer the two old ones into the current one first before taking any money from them.
Taking the 25% tax free is not such a big issue, but if you start later taking taxable income from multiple pots you might get in a tangle with HMRC/tax codes etc 

As above first thing is to double check that the current pension offers you the flexibility when withdrawing the pension, that you want. Older versions usually only offer restricted options.

Alternatively as above there is the 'small pots rule' . Pots of less than £10K can be withdrawn under this rule, without them impacting on LTA. You can do this three times, but whether your provider will be willing or able do it is another matter.
It is a loophole that is not that well known.

zagfles

From what I've read here HL will allow you to transfer to them and split your pot into 3 small pots, so you could do that with the 2 smaller pensions, you'll have £7k left over. However if you take the small pots out you still get taxed on 75% of their value, so might be an idea to leave actually taking the pots especially if you pay higher rate tax. The downside to waiting is the possibility the small pots loophole gets closed in a future budget...