Early retirement (for now) Pension V savings for an income

Scrounger

DeadlyD said:

I would have to think hard about whether to take the £12,570 tax free allowance if it then limits future pension contributions, definitely in the 1st year. 

If the £12,570 withdrawal was arranged using two small pots then that wouldn't limit any future pension contributions.  In fact you could take up to £16,760 tax free in the first year.

This would be require two partial transfers of < £10k to suitable provider (eg Fidelity) prior to making each of the small pot withdrawals.


Scrounger

DeadlyD

Albermarle said

Each pension will have different charging structures ( nothing is ever simple with this subject) As a big generalisation, the ones that charge more overall, usually do not have extra charges for other items. Whilst a low cost pension may charge for each withdrawal. However the charges will be a minor issue overall.
If you were doing it yourself ( without an IFA) you would inform the provider that you want to start withdrawing from the pension and how you would prefer to do it. They will tell you what is possible and how to do it. Most providers will also ask you quite a lot of questions as they are obliged to check that you know what you are doing, specifically that you realise if you take too much out too quickly, it might run out too quickly. They are covering themselves in case of any comeback later. 

Thank you 
I take it that the provider will offer advice then and maybe I won’t need an IFA. Once I’ve understood the varying options and made a decision on the income required. 

Bimbly

DeadlyD said:
I take it that the provider will offer advice then and maybe I won’t need an IFA. 

Your provider can tell you what your options are. They cannot offer advice on which one to take.

dunstonh

DeadlyD said:

Albermarle said

Each pension will have different charging structures ( nothing is ever simple with this subject) As a big generalisation, the ones that charge more overall, usually do not have extra charges for other items. Whilst a low cost pension may charge for each withdrawal. However the charges will be a minor issue overall.
If you were doing it yourself ( without an IFA) you would inform the provider that you want to start withdrawing from the pension and how you would prefer to do it. They will tell you what is possible and how to do it. Most providers will also ask you quite a lot of questions as they are obliged to check that you know what you are doing, specifically that you realise if you take too much out too quickly, it might run out too quickly. They are covering themselves in case of any comeback later. 

Thank you 
I take it that the provider will offer advice then and maybe I won’t need an IFA. Once I’ve understood the varying options and made a decision on the income required. 

No.  The provider will not offer advice.   Providers the providers.  They are not the advisers.     Some providers have a salesforce but its best not to use them as they are usually more expensive than using an IFA.

P933alilli

Just been casting a casual eye on the thread and seeing the £16760 taxfree of which 75% is made up of personal allowance.  Can this be used as a plan for taking the state pension and a Dc pension as i know the state pension is taxable which from next year will be about £10560 per year. I'll receive state pension in about 7 years! This would then leave only £6200 to withdraw taxfree each year from a dc pension?

Nebulous2

Collyflower1 said:

Just been casting a casual eye on the thread and seeing the £16760 taxfree of which 75% is made up of personal allowance.  Can this be used as a plan for taking the state pension and a Dc pension as i know the state pension is taxable which from next year will be about £10560 per year. I'll receive state pension in about 7 years! This would then leave only £6200 to withdraw taxfree each year from a dc pension?

Less than that - I make it £2680. 

If you deduct the pension from the personal allowance, you can take the rest of the personal allowance, plus the 25% tax free, assuming you maintain the 75% taxable / 25% tax-free ratio. 

DeadlyD

Nebulous2 said:

Collyflower1 said:

Just been casting a casual eye on the thread and seeing the £16760 taxfree of which 75% is made up of personal allowance.  Can this be used as a plan for taking the state pension and a Dc pension as i know the state pension is taxable which from next year will be about £10560 per year. I'll receive state pension in about 7 years! This would then leave only £6200 to withdraw taxfree each year from a dc pension?

Less than that - I make it £2680. 

If you deduct the pension from the personal allowance, you can take the rest of the personal allowance, plus the 25% tax free, assuming you maintain the 75% taxable / 25% tax-free ratio. 

So state pension forms part of your tax free allowance ? Holy smoke no wonder we need IFAs 

Nebulous2

DeadlyD said:

Nebulous2 said:

Collyflower1 said:

Just been casting a casual eye on the thread and seeing the £16760 taxfree of which 75% is made up of personal allowance.  Can this be used as a plan for taking the state pension and a Dc pension as i know the state pension is taxable which from next year will be about £10560 per year. I'll receive state pension in about 7 years! This would then leave only £6200 to withdraw taxfree each year from a dc pension?

Less than that - I make it £2680. 

If you deduct the pension from the personal allowance, you can take the rest of the personal allowance, plus the 25% tax free, assuming you maintain the 75% taxable / 25% tax-free ratio. 

So state pension forms part of your tax free allowance ? Holy smoke no wonder we need IFAs 

State pension is taxable, but doesn't have tax deducted. The tax then has to come from any other income, if you are over the allowance. 

No need for an IFA for that - the people on here, who know far more than I do, will offer enough pointers to keep you right and you can do the sums yourself. 

The main value of the £16760, as I understand it, is for people who retire before state pension age, and want to minimise their tax while filling the gap in income until the state pension kicks in. 

Albermarle

DeadlyD said:

Nebulous2 said:

Collyflower1 said:

Just been casting a casual eye on the thread and seeing the £16760 taxfree of which 75% is made up of personal allowance.  Can this be used as a plan for taking the state pension and a Dc pension as i know the state pension is taxable which from next year will be about £10560 per year. I'll receive state pension in about 7 years! This would then leave only £6200 to withdraw taxfree each year from a dc pension?

Less than that - I make it £2680. 

If you deduct the pension from the personal allowance, you can take the rest of the personal allowance, plus the 25% tax free, assuming you maintain the 75% taxable / 25% tax-free ratio. 

So state pension forms part of your tax free allowance ? Holy smoke no wonder we need IFAs 

All taxable pension income, including the state pension is treated in exactly the same way as earnings from employment. 

Bobinyorkshire

Could I ask if having the marriage tax allowance enhances the amount you could withdraw from a SIPP each year using the crystallisation system?
For example would a tax code of 1411M mean -
£1411 x 100/75 = £18,813 per year or
£12570 x 100/75 = £16760 plus (enhanced marriage allowance: £1411 - £12570 = £1540) which would be £18300

Or does it make no difference?