Pension withdrawal and tax. Please help clarify.

Homer_71

I wish to take a cash withdrawal from my works pension I have with Willis Towers Watson.
I have a couple of queries regarding this I’m struggling to understand. As I understand it I can withdraw 25% tax free, of that I want to be able to withdraw 10% of this in January 2026 as this coincides with me turning 55. I currently have £260000 in my pot of which 10% = £26000. I plan to continue working for same company for up to 1yr after this point. 

Can I still pay into this same pension fund through my salary until I take my early retirement as I do now, with the company matching my contributions when I take the 10% withdrawal from my pension in January 2026.
Will the £26000 + my gross salary of £39000 + annual work bonus of gross £3000. This will take my yearly money to £68000. I’m assuming in my head the tax free pension withdrawal is tax free so I will receive the full £26000 without any further tax being taken from my salary and bonus over that year can someone please clarify I will only be taxed my normal salary and bonus at my current level?
Last question is if I go ahead and withdraw the £26000 when will I need to trigger the withdrawal to receive on turning 55 in January 2026? Is it relatively quick or do I trigger it early to receive it on a specific chosen date?

dunstonh

I wish to take a cash withdrawal from my works pension I have with Willis Towers Watson.

WTW are professional administrators.   They handle Defined benefit plans and defined contribution.    which is yours?  

 As I understand it I can withdraw 25% tax free, of that I want to be able to withdraw 10% of this in January 2026 as this coincides with me turning 55. 

If its a DC scheme yes, if its a DB scheme no.

Also, if it is a DC scheme, then you would be asking for a partial crystallisation rather than a full one and not all schemes support that option.   

Can I still pay into this same pension fund through my salary until I take my early retirement as I do now, with the company matching my contributions when I take the 10% withdrawal from my pension in January 2026.

Rules allow that, but it doesn't mean the scheme does. So, you would need to ask WTW.

 I’m assuming in my head the tax free pension withdrawal is tax free 

Tax free cash is called that because it is tax free.

Last question is if I go ahead and withdraw the £26000 when will I need to trigger the withdrawal to receive on turning 55 in January 2026?

You will need to ask WTW.   They may require the process to start from your 55th.

Is it relatively quick or do I trigger it early to receive it on a specific chosen date?

Nothing with WTW tends to be quick but its worth asking them what their process is with the scheme you are on.

molerat

Can you continue paying in ?  - You will need to confirm that with the pension scheme but there is nothing in law to stop you.

Tax ? - The 25% is TAX FREE, the tax man will not know about it and it does not affect your other income.

Most pensions can deal with the withdrawal fairly quickly ........ but ,,,,,,,,,,,,,, this is WTW!  and  trying to set it in motion before you are 55 could cause a hiccup as they are renowned for their incompetence, others may be able to comment on that point.

Albermarle

From what you hear about WTW, by the time you have asked them the questions suggested above and got the answers, and then requested the tax free sum and received it, you might be nearer 65 than 55 !

LXdaddy

Talk to your pension administrator (WTW in this case). Start the conversation as early as possible and provide as much information about what you want to do as possible.  All the answers to your questions (other then the tax status of a tax free lump sum) depend on the scheme rues.

Homer_71

It is I believe a DC scheme and why am I not surprised to find out the pension administrators the company I work for are incompetent because they are incompetent. Thanks all for the answers