One off pension withdrawal

mikeF000

Hi, I don’t plan to draw my main pension yet and am still working , but recently found out I’ve £30k in a separate pension. I wouldn’t mind taking £7.5k tax free amount. Can this be done easily ? Is the onus on me to keep track of pension withdrawals?, and any tax free amounts I might take ?
Any thoughts appreciated. 

eskbanker

Most pensions will allow this, and the companies will ensure that tax is applied where necessary.

There's a separate pensions board on here, by the way:

https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

dunstonh

Can this be done easily ?

Modern pensions, yes.   Legacy pensions or basic pensions, less likely to be easy.  Often it involves transferring it to a modern plan.

 Is the onus on me to keep track of pension withdrawals?

Accessing the 75% element requires a bit more awareness of what you are taking out but not the 25% element.

Do remember that anything you draw now means you do not have it later.   And you only get one bite of the cherry on those particular funds.  i.e. drawing it all up front means you wont be able to use the phased method later on (with this amount).   So, just because you can do it, doesn't mean you should.

ColdIron

I assume it's a Defined Contribution pension

You need to be careful with your first withdrawal. If you take any income (apart from the tax free PCLS) it will trigger the MPAA (Money Purchase Annual Allowance)

This will limit any further contributions to a pension to £10,000. This may or may not matter to you

Using UFPLS (Uncrystallised Funds Pension Lump Sum) will trigger it. Crystallising some or all of your crystallised pot by moving it into flexi access drawdown, but not taking an income, will not

I wouldn't rush into this, do some reading until you understand the implications, but it could be right for you

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

mooneysaver

Yes ts advisable to take out the 25% cash free lump sum as soon as possible as if you leave it to grow before taking it it will use up more of your allowance.

Just make sure you're aware of the pension recycling rules, you should start putting the full £60k into your pension at least 3 years before taking the first 25% to avoid falling foul of them.

ColdIron

To the OP. The post above can safely be ignored

xylophone

If this is a standard DC pension on an old plan that does not facilitate flexible access, you could consider a transfer to Hargreaves Lansdown.

They also facilitate (if required) splitting the £30,000 into three small pots -  this could be of advantage if you wanted to access more than the PCLS without triggering MPAA.

https://forums.moneysavingexpert.com/discussion/6465857/flexi-access-drawdown-tax-implications

Guidance available from Pension Wise

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise