Tax on DC Pension

johnboy13

Sorry 25%.

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As you are planning to access a DC  pension, you could find it helpful to book an interview with Pension Wise.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

To make the most of your Pension Wise appointment, it’s a good idea to:

• know as much about your pensions and other finances as possible
• think about your plans for retirement, including when you’d like to start taking your pension. 

For a list of information to gather, see How to prepare for your Pension Wise appointment.

For an overview of your pension options, see our guide What can I do with my pension pot?

MallyGirl

johnboy13 said:

Thank you all for commenting. So if I just take the 20%and leave the rest invested, what happens then if I leave it?

Assuming that this is a DC pension from a former employment that you no longer contribute to then it depends on how modern a pension it is. If it supports Flexi Access Drawdown (FAD) then you could take the 25% tax free element and leave the 75% taxable bit in there to continue to grow. No tax to pay and it may give you enough to get yourself in a better place with your finances. At a later point, once retired, you will pay tax at your normal rate on any withdrawals of the remaining 75% (whatever value it has at that point will all be taxable).
if it is an old pension then you might need to transfer it before using FAD. That should be straightforward unless it has any benefits like a GAR (guaranteed annuity rate).

johnboy13

Thank you all so much for replying. Its great information.