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Taking 25% tax free and still pay in.

Can I please ask for some clarification. I'm 55 this month and wish to take 25% from my pension but still continue to pay in. I pay in 10% and so does my employer. I plan to continue to work. If I wanted to take another lump sum in say 5 years how does this work with a tax free amount. I'm guessing it's 25% of anything above the 75% left? Is that right and do all companies allow this? Thankyou Steve
Ask me no questions, and I'll tell you no lies

Comments

  • Marcon
    Marcon Posts: 12,971 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    stebiz said:
    Can I please ask for some clarification. I'm 55 this month and wish to take 25% from my pension but still continue to pay in. I pay in 10% and so does my employer. I plan to continue to work. If I wanted to take another lump sum in say 5 years how does this work with a tax free amount. I'm guessing it's 25% of anything above the 75% left? Is that right and do all companies allow this? Thankyou Steve
    Probably easiest to think of it as 'two separate pots'. The 'remaining 75%' in one pot, with no more tax free cash from that.  Any future tax free cash will be 25% of the second pot - i.e. contributions and investment returns paid in from immediately after you take 25% of the existing amount.

    Check the rules of your scheme to see what it allows before doing anything. If you have to 'opt out' to enable you to take money from the scheme, it may be that your employer won't re-admit you for up to 12 months, and you'll miss out on those employer contributions.


    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • squirrelpie
    squirrelpie Posts: 1,207 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Have you worked out how much your pension will be reduced by taking lump sums before you retire? Will you be happy with that reduced income?
  • Cobbler_tone
    Cobbler_tone Posts: 545 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    At 55 I’m itching to access my DB pension but doesn’t make sense. 
    Totally depends on your scheme and circumstance but at least make sure you crunch the numbers and understand the full impact.
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