Tax payable on pension drawdown.

RogerPensionGuy

Greg_J said:

Just as a heads up, the current Tax free allowance is £12570 and the 40% threshold is £50,270.  Any drawdown from a pension pot of over 30k will have to be done by a financial adviser ( legal requirement) and fees will be incurred alongside any taxes due. 

I don't think a person needs financial advice if drawing out of a normal pension. 

However if a person is moving a DB CETV of more than 30K I think legal requirement is in force.

Hopefully someone will comment on my understanding.

ader42

Correct. If you have £1million in a DC SIPP for example you don’t need a financial advisoer to take out your £250k tax free lump sum. 

Albermarle

RogerPensionGuy said:

Greg_J said:

Just as a heads up, the current Tax free allowance is £12570 and the 40% threshold is £50,270.  Any drawdown from a pension pot of over 30k will have to be done by a financial adviser ( legal requirement) and fees will be incurred alongside any taxes due. 

I don't think a person needs financial advice if drawing out of a normal pension. 

However if a person is moving a DB CETV of more than 30K I think legal requirement is in force.

Hopefully someone will comment on my understanding.

You are correct. You can drawdown as much as you like from a DC scheme without financial advice. You could even take the whole lot as a lump sum. You would get a lot of warnings from the provider that it was probably a bad move, but you can still do it without financial advice. 

There is at least one big pension provider ( Prudential) who will charge you 3 % for moving into drawdown under the guise of financial advice. But when you drill down it is not proper advice, and just a smokescreen to charge you more. The solution is to transfer the pension out of the Pru.

Also most providers will make statements that they advise that you  should take financial advice before going into drawdown. However this is just to cover their backs and there is no legal requirement at all. 

RogerPensionGuy

Just to add, I called up my DC pension people the other day.

They confirmed talking to them isn't financial advice. 

They said I needed to review the options available to me within 1 year of even talking about how I may like them and said we sent you(me) all the required information 13 months ago, so they zapped me an email with the updated information, I had to confirm an ID on the email and then they explained how I could start getting the coins out.

They were quite helpful and I learned I cannot take 25% tax free in each of say 12 months payments, so example I would take 5K lump sum and then 1.25K PM X 12.

They said, if say it was 20K out in a year I would need to shuffle the 20K on day one into the drawdown bucket, a few months ago they advised me 2 years, ie 40K on day one.

marlot

Greg_J said:

Just as a heads up, the current Tax free allowance is £12570 and the 40% threshold is £50,270.  Any drawdown from a pension pot of over 30k will have to be done by a financial adviser ( legal requirement) and fees will be incurred alongside any taxes due. 

I've drawn down from a bigger pot than that without a financial advisor.

I have had to satisfy my pension provider that I understand the risks.