Can live without my DC pension pot but should I take the 25% tax free at the moment

dunstonh

eastcorkram said:

Linton said:

eastcorkram said:

What would not taking it acheive?

Less effort and the money would continue to be fully invested.  The reason the OP has stated for taking the money is given as  "my unrest is based on the UK currently and the poor state of the global situation".  Taking investment decisions on one's judgement of the global economy is unlikely to be beneficial in the long trerm. Unless you need the cash it is generally better to do nothing.

Although I understand what you're saying, but then it seems whenever the OP was to ask that question, now, next year, the year after, the answer is always, Don't take it. They've already said they're fine on state pension plus DB etc. 

So it's never going to get taken.

Don't get me wrong, I'm now retired, and I've not taken anything from my DC pension either. I'm not suggesting the OP should take it, but it does make you wonder what the point of it is. 

The general rule of thumb is to not take it unless there is justification to do so.   The OP has yet to provide any justification for doing so.     

This is why the questions seek that justification but very often with these types of threads, there isn't a justification.  Although sometimes there is.

Marcon

dunstonh said:

eastcorkram said:

Linton said:

eastcorkram said:

What would not taking it acheive?

Less effort and the money would continue to be fully invested.  The reason the OP has stated for taking the money is given as  "my unrest is based on the UK currently and the poor state of the global situation".  Taking investment decisions on one's judgement of the global economy is unlikely to be beneficial in the long trerm. Unless you need the cash it is generally better to do nothing.

Although I understand what you're saying, but then it seems whenever the OP was to ask that question, now, next year, the year after, the answer is always, Don't take it. They've already said they're fine on state pension plus DB etc. 

So it's never going to get taken.

Don't get me wrong, I'm now retired, and I've not taken anything from my DC pension either. I'm not suggesting the OP should take it, but it does make you wonder what the point of it is. 

The general rule of thumb is to not take it unless there is justification to do so.   The OP has yet to provide any justification for doing so.     

This is why the questions seek that justification but very often with these types of threads, there isn't a justification.  Although sometimes there is.

Sometimes you're lucky to get any response at all!

singhini

in struggling to understand that video.

At 4.05 to 4.30 i understand how he took the £16,760 all tax free but the next 5 secs where he suggests you can take a bit more from the tax free section thus totalling £20,000 annually makes no sense to me.

1) How was he able to take £20,000 all tax free each year
2) What is this method of taking the money out of a pension called? 

bjorn_toby_wilde

Presumably the £16,760 is UFPLS then he’s suggesting topping up using a TFLS of £3240 to get to the £20k target.

That would crystallise £9720 which would remain in the pension but be taxable in future when withdrawn. Some providers separate that out into a crystallised pot.

Linton

eastcorkram said:

Linton said:

eastcorkram said:

What would not taking it acheive?

Less effort and the money would continue to be fully invested.  The reason the OP has stated for taking the money is given as  "my unrest is based on the UK currently and the poor state of the global situation".  Taking investment decisions on one's judgement of the global economy is unlikely to be beneficial in the long trerm. Unless you need the cash it is generally better to do nothing.

Although I understand what you're saying, but then it seems whenever the OP was to ask that question, now, next year, the year after, the answer is always, Don't take it. They've already said they're fine on state pension plus DB etc. 

So it's never going to get taken.

Don't get me wrong, I'm now retired, and I've not taken anything from my DC pension either. I'm not suggesting the OP should take it, but it does make you wonder what the point of it is. 

You do eventually take the pension - when your retirement plan says you need the cash to do whatever it is you want to do. If you never need the money, whether you die with cash or die with a large pension pot does not matter, so why spend time fretting about it.

NeverOutOfWork

Thank you all for your advice, I have the opportunity to fully fund 2 x ISAs in April and whilst the option to take 25% TF, and that option might disappear, it begged asking a question of those with greater understanding than I have.

Albermarle

singhini said:

in struggling to understand that video.

At 4.05 to 4.30 i understand how he took the £16,760 all tax free but the next 5 secs where he suggests you can take a bit more from the tax free section thus totalling £20,000 annually makes no sense to me.

1) How was he able to take £20,000 all tax free each year
2) What is this method of taking the money out of a pension called? 

Lets say you have a £100K uncrystallised pot.
You take a UFPLS payment of £16760 comprising £4190 tax free and £12570 taxable ( but not actually taxed) 
You still have £83, 240 uncrystallised, so nothing stopping you taking more tax free cash on its own to reach the tax free income required. In this example another £3240. 

The downside is that the tax free cash will obviously run out quicker, and at some point in later years, you will have only crystallised funds left. So if you wanted to take £20K then it would all be taxable income. So anything above £12570 would be taxed.  

Pat38493

NeverOutOfWork said:

Thank you all for your advice, I have the opportunity to fully fund 2 x ISAs in April and whilst the option to take 25% TF, and that option might disappear, it begged asking a question of those with greater understanding than I have.

To come at it from a slightly different angle, when do you think you will need to spend the money?  If you don't actually need the money now, there is no particular advantage from taking it out of the pension.

On the other hand, there is no particular disadvantage if you can get it all into ISAS and then invest it in exactly the same way as it was investesd in the pension.  The further advantage of this, is that if at some future date, you suddenly decide you want to make a big spend, you can do it without risking to go into a higher tax band.

You are thinking along the right lines that if you take it out and you don't spend it, you should get it into ISAs as soon as possible.

The other thing to note is that generally, your pension and/or your ISA is just a wrapper.  Inside that wrapper, you are in control of how the money is invested.  If you think the global stock markets are going to collapse, there is usually nothing to stop you moving all your money into cash (or bonds) but leaving it inside the pension.  In other words taking the tax free cash is not a solution to the non stellar performance as they are 2 separate topics.

Note - I am not suggesting it's a good idea to move your money all into cash inside the pension - probably it would be a terrible idea.  I am just pointing out that it is your decision.