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Taking my working pension early
Tdal13
Posts: 1 Newbie
Hi, I’ll be 55 in March and I’m thinking of taking what pension I have all out in one go. I have 2 not very big pensions but not sure if I’ll be stung for tax or anything if I do this, can anyone tell me what is likely to happen? Thanks.
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1) Depending on your current earnings you will likely pay a large chunk in tax on 75% of the pension 2) Unless you have other financial assets, you will face a very frugal existence trying to live solely on the state pension when you retire.Tdal13 said:can anyone tell me what is likely to happen?0 -
I have 2 not very big pensions but not sure if I’ll be stung for tax or anything if I do this, can anyone tell me what is likely to happen?75% of the draw will be added to your income and tax will be at the appropriate rates of income tax. Initially, you will be taxed at emergency rate. This could result in too much or too little tax being deducted to begin with. However you would notify HMRC and it would then be corrected.
Your annual pension allowance would be reduced to just £10,000 pa. (gross and including employer contributions).
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Define "not very big". Small enough to be considered "small pots"? And as MEM said some will be taxable, perhaps at a high rate.
Also are you retiring? If not are you currently paying into a work pension scheme? Depending on what types of pension you are considering taking and how you may be limited in the future tax free amounts you can pay into your OPS.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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Check your state pension on: Check your State Pension forecast - GOV.UK
"Never retract, never explain, never apologise; get things done and let them howl.” Nellie McClung
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Assuming you are still working then you should really be thinking about making your pension pot bigger, not cashing them in.Tdal13 said:Hi, I’ll be 55 in March and I’m thinking of taking what pension I have all out in one go. I have 2 not very big pensions but not sure if I’ll be stung for tax or anything if I do this, can anyone tell me what is likely to happen? Thanks.2 -
Why? What are you hoping to accomplish by doing so?Tdal13 said:Hi, I’ll be 55 in March and I’m thinking of taking what pension I have all out in one go.Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0
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