Some pension advice please

retiringtoosoon

Being 43 years old I love negative years. More units for my monthly purchases. The fund is welcome to boom post early retirement!

Pat38493

Pat38493 said:

Nelson1100 said:

Audaxer said:

Why would you want/need to take it all out in one year and get taxed on some of it? As I said in an earlier post you could draw out the tax free amount, and the taxable part up to your personal tax allowance over 3 years, and not pay any tax, providing that was you only income in retirement.

No I wouldn't necessarily take it all out in one year, this is the part I never understood until recently, when the government said we could take our pension as a lump sum a few years ago & only pay tax on 75% I took it to mean if I had £40k in there I would get £10k tax free and pay tax on the £30k, but I thought (and to be honest Zurich never explained it to me) that it had to be all in one go.  I will call them again tomorrow but as I mentioned earlier - once I've taken my tax free 25% can I just call up Zurich or L&G and ask for a few thousand here and there to be transferred out? Do they have a minimum withdrawal amount  or a maximum number of withdrawals a year? 

You should theoretically be able to take out any amounts you want at any time, but this depends on the operational procedures of the pension scheme.  I don't know anything about Zurich so they would have to tell you what their process is for withdrawals - for example some schemes allow you to set up a regular withdrawal monthly, and others you have to trigger the withdrawals.  Some would make a charge for each withdrawal, others don't, or maybe allow x number of free withdrawals per year.

But as said above, if Zurich or whoever doesn't provide the flexibility you are looking for, you can transfer the fund to another provider.

Taking the money out is not quite as simple as taking money out of a cash machine - especially the first withdrawal - there will probably be paperwork to fill in and checks to do.  Depending on the scheme it could take anything from a day or two to a few weeks to get each withdrawal that you request.

All these comments are assuming that you have the money in a pension that allows flexible withdrawals using "drawdown".  But as I say above, if it doesn't you could simply transfer the whole fund into one that does.

One other things to be aware of is that as soon as you withdraw an amount beyond your 25% tax free cash, you will trigger a lower pension contribution allowance in future - if you go back to work after that you will only be allowed to contribute £4K per year to any pension instead of the up to £40K outlined above.  If you never intend to go back to work or at least not to join a work pension scheme in future this doesn't matter to you.

Hello @nelson1100 I asked the question about your fund "L&G PMC Fixed Interest Fund 3" on a separate thread which you can find here:

L&G PMC Fixed Interest Fund 3 — MoneySavingExpert Forum

Basically it is probably that you were moved into this fund because your pension is expecting you to purchase an annuity at retirement age.  I doubt that this will be what you want to do after taking advice, so you may want to look at changing your pension investment fund - normally you have to ask them how to get access to the pension online and then you can see what investments are available, but if you don't know what you are doing you should take advice before changing it.

Also on the other thread you will see that "normally" (described as 95 years out of 100) this type of fund is should provide a kind of moderate and fairly safe growth year on year.  Unfortunately in 2022 these type of investments suffered not one but two of the "5 out of 100" events.  This still does not mean they won't perform fine in 2023 and beyond - as stated earlier everything needs to be looked at fairly long term when we are looking at retirement periods of 30+ years.

Nelson1100

Pat38493: Thank you so much for that, its very useful. I am going to take some professional advice & I'll keep you posted.