TFLS withdrawal before Autumn budget

Albermarle

kinger101 said:

Regardless of what happens in the budget, inflation is eroding the 268k every year.  So if you can pay off mortgage and shelter as best possible the remainder from tax, then it's a sensible option.

Yes there are two partly intertwined, but separate issues;
1) Speculation before the budget that the £268K will be reduced, prompting some people to take the full £268K now, when otherwise they would not have done. Potentially exposing themselves needlessly to CGT/Dividend/savings interest tax. A few people ( like the OP) may have a good plan for the £268K, reducing the risk of taking it all out.
2) The a lot more certain prediction that the £268K will not increase with inflation. In this case it makes sense for more people to take more of the TFLS earlier than planned, but in stages still, so it can be distributed easily into ISA's etc. Especially with the change in IHT for unused pension pots from 2027

I am doing 2) although one withdrawal was to help family with a house purchase, so I would have done it anyway. I am about to take a smaller one, so that one of my three pots will be fully crystallised, but the other two are not.
In fact currently I do not have enough to withdraw £268K but will probably get there one day, so makes sense to do some gradual withdrawals in the meantime.

Johnnyboy11

Another attraction of taking a TFLS now is that US and UK stock markets are at an all time high, and taking some profit now might not be a bad idea. Certainly better than the aftermath of Liberation Day!

Grumpy_chap

RogerPensionGuy said:

One factor that finally tempted me to take this action is looking at the average UK pension pot at various ages and especially age 66(apparently 185K) any reduction of the 268K may not affect much % of people currently and historically we have seen that old LTA go up to 1.8M/450K TFLS and then down to 1M/250K TFLS, such a crazy history.

***

  https://www.pensionbee.com/uk/pension-landscape
  

That type of data has to be read with a great deal of caution.

There is, or may very well be, a significant difference between the "average pension pot" of an individual age 66 and the "average retirement provision" of an individual age 66.
Many people will reach age 66 with several "pension pots" accrued from different employers.
Some people will also have DB pension available at age 66, which does not show as a "pot" as such but clearly has value towards the "retirement provision".
Some people will have "retirement provision" outside of pension wrapper, for example ISA / BTL.

Does the "average pension pot" at age 66 of £185k suggested in the Pension Bee article refer to simply "pension pot" size, which individuals may have several of, or does the £185k refer to "retirement provision"?

Argonauts

Could she possibly say
if you’ve taken your 268k no more for you 

if you taken below 268k or none 
then the new figure is ??
100/150/200k

anyones guess 

RogerPensionGuy

Grumpy_chap said:

RogerPensionGuy said:

One factor that finally tempted me to take this action is looking at the average UK pension pot at various ages and especially age 66(apparently 185K) any reduction of the 268K may not affect much % of people currently and historically we have seen that old LTA go up to 1.8M/450K TFLS and then down to 1M/250K TFLS, such a crazy history.

***

  https://www.pensionbee.com/uk/pension-landscape
  

That type of data has to be read with a great deal of caution.

There is, or may very well be, a significant difference between the "average pension pot" of an individual age 66 and the "average retirement provision" of an individual age 66.
Many people will reach age 66 with several "pension pots" accrued from different employers.
Some people will also have DB pension available at age 66, which does not show as a "pot" as such but clearly has value towards the "retirement provision".
Some people will have "retirement provision" outside of pension wrapper, for example ISA / BTL.

Does the "average pension pot" at age 66 of £185k suggested in the Pension Bee article refer to simply "pension pot" size, which individuals may have several of, or does the £185k refer to "retirement provision"?

I fully agree this data about average pension pot of 185K@66 is just a bit of data and probably not a very reliable indicator. 

However ignoring 185K@66, it is often said that if the 268K TFLS was reduced to say 100K it would only affect a small % of people so easily accepted from a society point of view.

This is just like currently only 3 or 4% of UK estates pay IHT and again appears very acceptable in society, with housing inflation and SIPPs and hard fiscal drag being applied, this 3 or 4% will be ramping up nice and strongly as time slips by. 

Along with my views above, I think about the Waspi situation, it had looked like a different government was going to be helpful or a little kinder, unfortunately the Waspi situation is far from resolved or maybe a reasonable outcome being achieved.

My feelings are people with good pensions, housing, pay, income, savings, investments etc will indeed be in line to pay more taxes as they have the broadest shoulders, roll on the 26th if November. 

QrizB

Grumpy_chap said:

RogerPensionGuy said:

One factor that finally tempted me to take this action is looking at the average UK pension pot at various ages and especially age 66(apparently 185K)

  https://www.pensionbee.com/uk/pension-landscape
  

That type of data has to be read with a great deal of caution.
Does the "average pension pot" at age 66 of £185k suggested in the Pension Bee article refer to simply "pension pot" size, which individuals may have several of, or does the £185k refer to "retirement provision"?

Here's the current ONS data, which is probably the best there is.

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/pensionwealthwealthingreatbritain

I think it includes public-sector pensions; see the Glossary for definitions (my bold):

Private pension
A pension other than the state pension (made up of the Basic State Pension and the additional state pension). It includes all workplace (occupational or group personal pensions, including those for public sector employees) and individual personal pensions.

I might try to pull some numbers from that data when I've got a bit more time.

Grumpy_chap

RogerPensionGuy said:

it is often said that if the 268K TFLS was reduced to say 100K it would only affect a small % of people so easily accepted from a society point of view.

It might be said, but that might be said against incorrect data, or against the incorrect data set.

The TFLS only applies to individuals at retirement age (or at least at minimum age to access pension funds without penalty).
It also affects many with DB pensions, the best of which remaining are public sector workers.  Again, only when they reach the age at which benefits are accessible.

There are many people that would not be immediately affected by pension TFLS reduction because they cannot yet access the funds and have not yet accrued the pension fund sufficient to be able to take over £100k as 25% of total pot.  Those individuals are still working and still contributing and still allowing the magic of compounding to do its stuff.  Any reference to average pension pot rather than average pension fund forecast at retirement age is disingenuous.

DRS1

Having read the OP's thread about scheme specific protection for his TFLS I think he may have another reason for taking it now (less chance for someone to mess it up again) which won't apply to most people.

I have taken all of mine now but that is just a by product of turning all my pensions into annuities.  The fact that I bought one annuity last year before that Budget and one this year before this year's Budget is purely coincidental.  Honest.

ukdw

RogerPensionGuy said:

Cobbler_tone said:

If you have £268k tax free to take now in isolation it is pretty low risk to do so. Unless of course they increase the limit (now or in the future), which would be a tad ironic.

Although I'm guessing 268K will never be increased, if a person had wolfed out 268K and they kept some SIPP funds uncrystallised, should the 268K be increased, I'm guessing them funds will be available just like when the LTA went up previously.

I am currently removing more/my remaining TFLS PCLS up to that 268K and SIPP provider asked if I wanted to put all remaining funds in the drawdown pot/crystallised bucket and I explained the possibility of 268K going up and that could disadvantage me, they fully agreed probably better keeping an uncrystallised pot if possible, person just said it will look messy having two pots in the SIPP.

I am not really happy taking out my full TFLS PCLS now, but I just don't trust them.

One factor that finally tempted me to take this action is looking at the average UK pension pot at various ages and especially age 66(apparently 185K) any reduction of the 268K may not affect much % of people currently and historically we have seen that old LTA go up to 1.8M/450K TFLS and then down to 1M/250K TFLS, such a crazy history.

***

  https://www.pensionbee.com/uk/pension-landscape
  

One risk of not crystallising the whole lot is the potential (but hopefully pretty unlikely) reintroduction of the lifetime allowance. If it came in again at 4x268k then uncrystallised funds might be more at risk than crystallised.

ukdw

Steve182 said:

I've decided to withdraw all of mine, and do a bit of recycling, well below the allowable limit, to take full advantage of the £268K allowance in case it's reduced, which I fear it will be.

Doesn't take too long to use the money sensibly, pay off mortgage, ISAs, a bit of pension recycling, investment in growth shares (sell before £3K CGT limit reached) etc etc

Just wondering if any others here are doing or considering the same?

I took the full PCLS on my 55th birthday a few years ago when I thought there was a risk of a drop to about £60k (which the libdems who were in coalition).

 I wouldn't be letting  the £3k CGT limit drive too much of my thinking - I would of course make sure I made use of each years allowance by bed and breakfasting - but I would be hoping to make a lot more than £3k gain a year on £268k - so would probably just be happy about the gain and pay the tax before they increase the rate too much.