Mix of 25% tax free lump sum and ongoing drawdown

UrbanAchiever

Assuming a pension pot of £200k, can I take say £25k as a tax free lump sum (which means £75k would now be taxable on withdrawal), and have the remaining £100k available to withdraw as ongoing income with 25% of this being tax free and the balance being taxable?   I "think" this is called partial or phased drawdown from looking on various websites, but none have been totally clear and I wanted to confirm.

Thanks.

Marcon

UrbanAchiever said:

Assuming a pension pot of £200k, can I take say £25k as a tax free lump sum (which means £75k would now be taxable on withdrawal), and have the remaining £100k available to withdraw as ongoing income with 25% of this being tax free and the balance being taxable?   I "think" this is called partial or phased drawdown from looking on various websites, but none have been totally clear and I wanted to confirm.

Thanks.

Yes, assuming you are in a pension scheme which offers such a facility. Not all do, especially older contracts - so you'd need to transfer to a more modern one.

UrbanAchiever

Great, thank you.  I'll need to check with my pension providers on that. 

wjr4

This is called an ‘Uncrystalised Funds Pension Lump Sum’ (UFPLS). 

Albermarle

You may find that even if a pension provider is able to do this it will be a faff.
Each UFPLS withdrawal comes with some compliance administration, which could mean anything from ticking a few boxes, to needing a booked telephone call. 
Due to this many people just take one or two payments a year and put the money in a savings account, until they need it.

To be clear I am referring to a private individual using one of the pension providers that deal direct with the public.

An IFA handling the pension has more options.