Pension pot - taking 25% tax fr

Tax_Slave

I’m planning on taking 25% lump sum from one of my pension pots in next few months.
Will tax be deducted from this and I then have to claim it back or do I get it tax free because it’s my 25% tax free allowed withdrawal.

Had anyone done this and can advise?

Thanks 

Dazed_and_C0nfused

Tax_Slave said:

I’m planning on taking 25% lump sum from one of my pension pots in next few months.
Will tax be deducted from this and I then have to claim it back or do I get it tax free because it’s my 25% tax free allowed withdrawal.

Had anyone done this and can advise?

Thanks 

Millions of people have done it.

Have never heard of a single person who has had tax deducted from a tax free lump sum.

Pat38493

Tax_Slave said:

I’m planning on taking 25% lump sum from one of my pension pots in next few months.
Will tax be deducted from this and I then have to claim it back or do I get it tax free because it’s my 25% tax free allowed withdrawal.

Had anyone done this and can advise?

Thanks 

As long as you make the request in the correct way to withdraw only tax free cash amounts, no tax will be deducted - tax free cash is just that - completely non taxable amount.

Steve_666_

Pat38493 said:

Tax_Slave said:

I’m planning on taking 25% lump sum from one of my pension pots in next few months.
Will tax be deducted from this and I then have to claim it back or do I get it tax free because it’s my 25% tax free allowed withdrawal.

Had anyone done this and can advise?

Thanks 

As long as you make the request in the correct way to withdraw only tax free cash amounts, no tax will be deducted - tax free cash is just that - completely non taxable amount.

and just to add the remaining 75% becomes crystalised and all of it will attract tax at your highest rate in the year you  draw it

Tax_Slave

Thanks.

I plan to withdraw 25% tax free and invest it myself as the pension growth seems to have stalled over the last 16 months.
There is a very high probability I will die in the next 8 years so the remaining 75% will go tax free to my wife when I die as named beneficiary.
aka I will be very very lucky to see the age of 68.
I don’t have any need to touch the remaining £150,000 after my 25% withdrawal.

AlanP_2

Pension growth is not a "thing".

Investments in tax wrappers such as pensions or ISAs perform the same way irrespective of the wrapper.

Would you invest it in something different to the options you have chosen for your pension?

Why not swap to a different option inside the pension if you think something else will do better?

Investments for most of us have stalled recently and for many have declined in value, particularly if heavy in bonds.

Marcon

Tax_Slave said:

I’m planning on taking 25% lump sum from one of my pension pots in next few months.
Will tax be deducted from this and I then have to claim it back or do I get it tax free because it’s my 25% tax free allowed withdrawal.

Had anyone done this and can advise?

Thanks 

Looking back at your previous questions, you've asked quite similar things more than once. Do you think a free appointment with PensionWise might help you to clarify your options once and for all? They can't give financial advice, but they can and will explain and give information: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise?source=pw

Sometimes actually talking to someone is more reassuring than answers from random strangers on a public forum!

Tax_Slave

AlanP_2 said:

OPension growth is not a "thing".

Investments in tax wrappers such as pensions or ISAs perform the same way irrespective of the wrapper.

Would you invest it in something different to the options you have chosen for your pension?

Why not swap to a different option inside the pension if you think something else will do better?

Investments for most of us have stalled recently and for many have declined in value, particularly if heavy in bonds.

The pension has lost £4,000 in 16 months and in last 7 months gone from £4K loss to £6k loss back to £4K loss back to £5k loss ….dead in the water.
I might just as well take out 25% / £50k approx and pop it into a 12 month fixed rate account and get 6%. Then when that matures consider something else such as government Bonds if rates are looking good. I have just bought government bonds maturing in 2047 at 4 1/2 % based on interest rates going down over next 5 years and values of bonds going up.
Also took a huge gamble on a share EDEN research (£1,500 I can afford to lose basically) bought in at 4p a few weeks back (less than 4 weeks ago) and sold at 11p this week ;-)….if only every investment paid like that.
But that’s high risk and I fully understand my pension is invested in low risk bonds that have dived this year.
I also have two private pensions (final salary ones) that provide an income.
So I’m going to take the £50k and invest it into a fixed rate bond for a year paying approx 6%.

Tax_Slave

AlanP_2 said:

Pension growth is not a "thing".

Investments in tax wrappers such as pensions or ISAs perform the same way irrespective of the wrapper.

Would you invest it in something different to the options you have chosen for your pension?

Why not swap to a different option inside the pension if you think something else will do better?

Investments for most of us have stalled recently and for many have declined in value, particularly if heavy in bonds.

Thinking about the date and remembering its premium bond day next Tuesday , even they are doing better than the pension fund returning £2850 (6 draws) on £100k so far this year :-) and they are a gamble I know also where you could come in well below average return.

Tax_Slave

Marcon said:

Tax_Slave said:

I’m planning on taking 25% lump sum from one of my pension pots in next few months.
Will tax be deducted from this and I then have to claim it back or do I get it tax free because it’s my 25% tax free allowed withdrawal.

Had anyone done this and can advise?

Thanks 

Looking back at your previous questions, you've asked quite similar things more than once. Do you think a free appointment with PensionWise might help you to clarify your options once and for all? They can't give financial advice, but they can and will explain and give information: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise?source=pw

Sometimes actually talking to someone is more reassuring than answers from random strangers on a public forum!

Good advice , I will contact them before making any decisions.

Linton

Tax_Slave said:

AlanP_2 said:

OPension growth is not a "thing".

Investments in tax wrappers such as pensions or ISAs perform the same way irrespective of the wrapper.

Would you invest it in something different to the options you have chosen for your pension?

Why not swap to a different option inside the pension if you think something else will do better?

Investments for most of us have stalled recently and for many have declined in value, particularly if heavy in bonds.

The pension has lost £4,000 in 16 months and in last 7 months gone from £4K loss to £6k loss back to £4K loss back to £5k loss ….dead in the water.
I might just as well take out 25% / £50k approx and pop it into a 12 month fixed rate account and get 6%. Then when that matures consider something else such as government Bonds if rates are looking good. I have just bought government bonds maturing in 2047 at 4 1/2 % based on interest rates going down over next 5 years and values of bonds going up.
Also took a huge gamble on a share EDEN research (£1,500 I can afford to lose basically) bought in at 4p a few weeks back (less than 4 weeks ago) and sold at 11p this week ;-)….if only every investment paid like that.
But that’s high risk and I fully understand my pension is invested in low risk bonds that have dived this year.
I also have two private pensions (final salary ones) that provide an income.
So I’m going to take the £50k and invest it into a fixed rate bond for a year paying approx 6%.

What your pension has done in the last 7 or 16 months tells you nothing about what it will do in the next 7 or 16 months.  The answer to a short term poor performance is not to go wildly risky, just keep investing in a broad range of assets.

It could be helpful for you to understand why your pension performed poorly, perhaps you will learn how to make better choices in the future. What funds are you holding in your pension??