Take lump sum whilst working

goldygash

Hi, apologies if this a really silly question, but I am so clueless when it comes to pensions and dreading having to make a decision about what to do over the next few years!

For now my question is this -

I will be 55 next month. I am still working full time and have no plans to retire anytime soon.  I have an old small pension of circa £15k and a current money purchase pension of circa £550k.
I would like to take some cash from the larger pot similar to the value of the small pension.  Will this be tax free, (part of the 25%), or does the fact that I am still working have an effect?

Thanks ☺️ 

eskbanker

In general it's possible to take up to 25% of the value of a pension pot tax-free (regardless of your other income), but you'd need to familiarise yourself with the rules of your scheme to establish exactly which drawdown options they support.

Pat38493

To add to the above post, yes it's possible to take up to the 25% tax free flexibly as and when you like, even if still working.  If your money purchase pension is with a very inflexible or old provider, you might fine that you have to transfer the pot to a different provider in order to get the full flexible options, but this is pretty easy to do these days.

If you are coming up to 55 you are likely to get leaflets through your door telling you that you can get this 25% tax free, and attempting to hoodwink you into thinking that you must transfer to that particular company to do this.  This is not true, and the companies sending out those leaflets will probable charge you a ridiculous % just to access something that you can do anyway.

Albermarle

There is a good govt website called Moneyhelper, that has a section on pensions.
It would be a good place to start to try improve your pension knowledge.
through this site you can also book a free chat with Pensionwise, which could also be useful.

LHW99

The only issue with your current pension could be whether you would be allowed to take the tax-free cash while still working (?) and paying in to it.

As said above you need to check the scheme rules.