25% tax free withdraw

grayson · 27 August at 12:29PM

I am 55 soon and I have 3 pension pots.
Worth £5000, 10000 and 60000.

If I withdraw £15000 from the 2 smallest pots ultimately closing them as I don't pay into them anymore. Will this be tax free? that would be under 25% of my total. So can I make the rest up by withdrawing from my bigger pot?

Everyone says I shouldn't touch them. However, I need to pay off some debt and make home improvements.
Also in this covid age lots of people don't reach retirement age.

Nebulous2 · 27 August at 12:39PM

Each pension stands alone for the 25% tax-free money, so no you can't take it all from the two smallest ones.

How are you for National Insurance contributions? The full state pension is £203.85 per week, are you on track to get that?

The problem with taking money from your pension now is that it will no longer be there when you retire. If it is difficult to pay everything you want to now, it might not be any easier on a reduced income once you stop work.

El_Torro · 27 August at 12:45PM

You could consolidate your 3 pots into one and take the 25% that way.

xylophone · 27 August at 12:52PM

Also in this covid age lots of people don't reach retirement age.

In any age lots of people don't reach retirement age (whatever that may mean... if (say) mid sixties, far more of the population reach it than don't)?

It could be possible to consolidate the three pensions into one scheme and then take 25% of the whole as a PCLS.

Taking just the PCLS would not trigger the MPAA.

State Pension forecast here

https://www.gov.uk/check-state-pension

QrizB · 27 August at 12:53PM

El_Torro said:

You could consolidate your 3 pots into one and take the 25% that way.

They could, but that would still leave the OP with a total pension pot of £60k (£75k less £15k) at age 55, which isn't a great position to be in.

Dazed_and_C0nfused · 27 August at 1:01PM

QrizB said:

El_Torro said:

You could consolidate your 3 pots into one and take the 25% that way.

They could, but that would still leave the OP with a total pension pot of £60k (£75k less £15k) at age 55, which isn't a great position to be in.

Or even just £56,250 😳

QrizB · 27 August at 1:28PM

So, the question for the OP is: if you take this money now, do you have a plan to rebuild your pension pot before you retire?

LHW99 · 27 August at 2:08PM

QrizB said:

So, the question for the OP is: if you take this money now, do you have a plan to rebuild your pension pot before you retire?

By for example not taking on any more debt and putting most of the money you don't have to pay each month to service the debts / mortgage into your pension?

Albermarle · 27 August at 2:47PM

Also in this covid age lots of people don't reach retirement age.

The number dying from Covid today is very small/insignificant.

Underestimating lifespan is a classic mistake many people make when looking at pensions/retirement.

A 55 year old will on average live another 30 years in the UK. That means 50% will live longer than that,and about 25% will reach their Nineties.

dunstonh · 27 August at 5:02PM

Also in this covid age lots of people don't reach retirement age.

So, you are planning on the basis of being the 1 in 5 people that don't make retirement?

Everyone says I shouldn't touch them. However, I need to pay off some debt and make home improvements.

If you are robbing money from your retirement money whilst you are still working then where will you rob it from whn you are retired and have even less coming in?

sandsy · 27 August at 6:57PM

You might want to take a look at the ONS life expectancy calculator: https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

Are you still working? If you withdraw more than 25% of any pot, although the 25% portion is tax free, the balance is treated as income so is liable to tax if your income exceeds the personal allowance.

25% tax free withdraw

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