Taking Money out of 1 pension at 55

Margaretmay

I am currently working full time and will continue to do so past 55. However, if I theoretically wanted some money at 55 could I take a lump sum tax free out of one of my pots and how will this affect the pot.

I have 3 pensions currently and am thinking of taking £25K out of one - this would not be the full tax free amount allowed out of that pot as the pot will be around £150K by the time I am 55. Can I crystallise all or part of this pension and what does crystallisation actually mean? If I then don't take anything out of it for another 10 years does it still continue to be invested and does it have any impact to me later down the line. Also does this affect the overall amount I am able to take out tax free as a one off? i.e. if I had for example $1.5M in my pension pots at age 65, yet I had taken out $25K at 55 from one of the pots, is there then a maximum I could take out when I am 65? I think the total maximum tax free lump sum is still 25% of the previous LTA (£1,073,000)? 

Thanks for any answers  

SVaz

You can crystallise as much or as little as you need for a tax free lump sum. You can do it once for the full amount or a dozen times for smaller chunks until the whole lot is crystallised. 

That is IF the pension allows it. 
The crystallised amount can never be accessed for tax free cash again, no matter how much it grows.  

It continues to be invested unless you sell the funds.
How crystallised and uncrystallised funds are kept separated depends on the pension company.
Some are totally separate ‘pots’ that you treat individually regarding investments.
Some are under a ‘notional split’ set up that is all kept together. 

SVaz

What accessing tax free cash,  you only need to sell funds to cover the lump sum you want to take, some people think that the whole amount to crystallise needs to be cash but that’s not the case. 

Albermarle

Currently your pensions are uncrystallised. If we look at the £150K one as an example.
To take the full 25% tax free ( £37.5K ) you need to crystallise all of it. 25% is given to your as tax free cash and 75% remains in the pension as crystallised funds. You can leave it there, or withdraw it but if you do it is classed as taxable income.
If instead you wanted less tax free cash like £25K, you need to crystallise £100K . So then you would have £25K tax free cash ; £75K Crystallised funds and £50K still uncrystallised.
However what you can do is sometimes restricted by the pension provider, especially so with older pensions and sometimes to improve flexibility you need to transfer the pension before starting the withdrawal process.

If I then don't take anything out of it for another 10 years does it still continue to be invested . It does unless you decide otherwise.

I think the total maximum tax free lump sum is still 25% of the previous LTA (£1,073,000)? 
Currently that is the case.

Margaretmay

Thank you both for taking the time to answer - much appreciated