Taking all of private pension

Nebulous2

Give us a clue then:- 

How early? 

How big is the pension? 

Do you have any other income? 

Retiring before state pension age will allow a withdrawal of over £16k a year tax-free. For most people on here that wouldn't be enough to live on. Draw any more and you'll be paying tax on it now, instead of later.....

QrizB

OP you asked essentially the same question two days ago:

https://forums.moneysavingexpert.com/discussion/6599183/taking-all-of-private-pension

football1966 said:

Has anyone else retired early and decided to remove all their private pension before they receive their state pension in order to avoid paying tax in the future

The answer to your question is "yes they have".

Does that help you at all?

dunstonh

Has anyone else retired early and decided to remove all their private pension before they receive their state pension in order to avoid paying tax in the future

yes.......

Bluebell1000

That is my plan for my DC pot, though I have a DB pension as well to supplement the state pension.

Aretnap

football1966 said:

Hi
Has anyone else retired early and decided to remove all their private pension before they receive their state pension in order to avoid paying tax in the future
Thanks 

Yes they have.

Is there anything else you want to know? If so, you're going to have to give us a clue what it is.

(One obvious piece of advice, when you say ISA do you mean cash ISA or stocks and shares ISA? Taking it out and putting it all in a cash ISA would be a bad idea, unless you plan to actually spend it in the fairly near future. Taking it out and investing it in broadly the same type of funds that your pension is invested in would be eminently sensible as a tax saving measure.)

bjorn_toby_wilde

I plan to remove most of my DC pension over the next few years and invest it in the same funds in S&S ISAs.

I’m already drawing two DB pensions and paying basic rate tax on some so I’ll be drawing up to the higher rate tax threshold before the state pension and my other DB kick in and reduce the headroom.

Thinking about this has raised an interesting question. Is it possible to transfer funds in specie from a pension to an ISA or would you have to sell to cash?

Notepad_Phil

bjorn_toby_wilde said:

I plan to remove most of my DC pension over the next few years and invest it in the same funds in S&S ISAs.

I’m already drawing two DB pensions and paying basic rate tax on some so I’ll be drawing up to the higher rate tax threshold before the state pension and my other DB kick in and reduce the headroom.

Thinking about this has raised an interesting question. Is it possible to transfer funds in specie from a pension to an ISA or would you have to sell to cash?

No you have to sell to cash, withdraw the money (paying any tax as needed), then add it to the ISA. If you have spare cash then I'd suggest that you do this in parallel, i.e. first put money into the ISA and then time the buying of funds with the selling from the SIPP so that you do what you can to protect yourself from any big market swings.

Roger175

football1966 said:

Hi
Has anyone else retired early and decided to remove all their private pension before they receive their state pension in order to avoid paying tax in the future
Thanks 

Yes, if you have a relatively modest pension, it makes sense to draw all your pension before SP age.

I have recently retired early (currently 61) and am taking as much as I can out of my pension for the next 6 years in order to use my nil rate tax band - this means I can take £16,760 per annum without paying any tax - the first 25% is tax free, leaving £12,570 taxable, but obviously I will not pay any tax as this is the amount of the nil rate band. In my case, the size of my pot will mean that these withdrawals account for only a part of the total and once I hit 67, the SP will mean that all further withdrawals will be subject to tax.

bjorn_toby_wilde

Notepad_Phil said:

bjorn_toby_wilde said:

I plan to remove most of my DC pension over the next few years and invest it in the same funds in S&S ISAs.

I’m already drawing two DB pensions and paying basic rate tax on some so I’ll be drawing up to the higher rate tax threshold before the state pension and my other DB kick in and reduce the headroom.

Thinking about this has raised an interesting question. Is it possible to transfer funds in specie from a pension to an ISA or would you have to sell to cash?

No you have to sell to cash, withdraw the money (paying any tax as needed), then add it to the ISA. If you have spare cash then I'd suggest that you do this in parallel, i.e. first put money into the ISA and then time the buying of funds with the selling from the SIPP so that you do what you can to protect yourself from any big market swings.

Thanks. That makes sense