I was going to retire anyway....

clive0510

HI All. I'm 62 and have had it mind for a while to take early retirement and draw my p/p. its well into 3 figures and would tide me over till my state pension kicks in in 5 years time. 
6 months ago my mum passed away and we have just sold the house. this left me with roughly the same amount of money as is in my pension. 
so question is do I now still draw my p/p and put my inheritance away somewhere. 
or do I leave the pension where it is and live off my inheritance?. 

TimSynths

leave the pension invested- assuming its a DC scheme. You can continue to pay into it too to get tax relief. Sorry about your Mum but like how you have grabbed the bull by the horns.

Kim1965

You dont say how much you need to live off. You could max out your pension contributions and live off your inheritance.. If you need to boost your pension? Do you want to draw themoney down to nothing or have you kids to leave money to? 

Dazed_and_C0nfused

In tax years where you have no other taxable earnings or pension income it might be worth taking £12,570 (or £11,310) out of your pension so you don't waste your Personal Allowance.

And don't forget in those tax years you can still add £2,880 to a DC pension and receive £720 in tax relief despite paying no tax.

If you do take taxable income (other than buying an annuity) you will invoke MPAA so think carefully if there is any chance you might want to contribute more than £10k/year if you work again in the future.

Doctor_Who

clive0510 said:

HI All. I'm 62 and have had it mind for a while to take early retirement and draw my p/p. its well into 3 figures and would tide me over till my state pension kicks in in 5 years time. 
6 months ago my mum passed away and we have just sold the house. this left me with roughly the same amount of money as is in my pension. 
so question is do I now still draw my p/p and put my inheritance away somewhere. 
or do I leave the pension where it is and live off my inheritance?. 

Maybe maximise pension contributions now whilst you have the earned income to allow it and once retired take ~£16K UFPLS each year so you use your personal allowance. Over ~5 years this could be ~£80K tax free withdrawn from the pension.

Albermarle

its well into 3 figures 

Hopefully this is a typo !

clive0510

Doctor_Who said:

clive0510 said:

HI All. I'm 62 and have had it mind for a while to take early retirement and draw my p/p. its well into 3 figures and would tide me over till my state pension kicks in in 5 years time. 
6 months ago my mum passed away and we have just sold the house. this left me with roughly the same amount of money as is in my pension. 
so question is do I now still draw my p/p and put my inheritance away somewhere. 
or do I leave the pension where it is and live off my inheritance?. 

Maybe maximise pension contributions now whilst you have the earned income to allow it and once retired take ~£16K UFPLS each year so you use your personal allowance. Over ~5 years this could be ~£80K tax free withdrawn from the pension.

Thanks for the reply. I don't get what you say about £16k. I was under the impression the most I can take from my pension tax free is £11k in any tax year?.

Dazed_and_C0nfused

clive0510 said:

Doctor_Who said:

clive0510 said:

HI All. I'm 62 and have had it mind for a while to take early retirement and draw my p/p. its well into 3 figures and would tide me over till my state pension kicks in in 5 years time. 
6 months ago my mum passed away and we have just sold the house. this left me with roughly the same amount of money as is in my pension. 
so question is do I now still draw my p/p and put my inheritance away somewhere. 
or do I leave the pension where it is and live off my inheritance?. 

Maybe maximise pension contributions now whilst you have the earned income to allow it and once retired take ~£16K UFPLS each year so you use your personal allowance. Over ~5 years this could be ~£80K tax free withdrawn from the pension.

Thanks for the reply. I don't get what you say about £16k. I was under the impression the most I can take from my pension tax free is £11k in any tax year?.

If you crystallise and withdraw £16k then £4k will be the TFLS and £12k is taxable.

You will have a Personal Allowance of either £11,310 (applied for Marriage Allowance) or £12,570 (you haven't applied for Marriage Allowance).

Doctor_Who

clive0510 said:

Doctor_Who said:

clive0510 said:

HI All. I'm 62 and have had it mind for a while to take early retirement and draw my p/p. its well into 3 figures and would tide me over till my state pension kicks in in 5 years time. 
6 months ago my mum passed away and we have just sold the house. this left me with roughly the same amount of money as is in my pension. 
so question is do I now still draw my p/p and put my inheritance away somewhere. 
or do I leave the pension where it is and live off my inheritance?. 

Maybe maximise pension contributions now whilst you have the earned income to allow it and once retired take ~£16K UFPLS each year so you use your personal allowance. Over ~5 years this could be ~£80K tax free withdrawn from the pension.

Thanks for the reply. I don't get what you say about £16k. I was under the impression the most I can take from my pension tax free is £11k in any tax year?.

As above - if you have no other taxable income then an UFPLS of £16,760 gives £12,570 taxable (£15,080 gives £11,310 taxable), which falls within your personal allowance, so is also not taxable. Hence, over 5 tax years that's £83,800 or £75,400 withdrawn from the pension tax free.

SVaz

Put as much as your earnings will allow into your pension this tax year, from the house money. 
Start UFPLS next April or later ( if you have no earnings)  and you can take £16k tax free for the next 5 years,  as stated, you can still pay £2880 into the pension which will give you a nice tax free amount in 5 years, along with whatever is left in the pension, as that will still be uncrystallised.  

Put the majority of the house money in NS&I at 6.2%.  

43722

Retire, and enjoy it.