25% tax free from one of two pensions trigger MPAA

carman100

I’m 55 and planning to use my 25% tax free lump sum from ONE of my pensions.

As a scenario, consider I have two pensions:

  Pension A, current value £100k, DC, old workplace stakeholder pension no longer paying into.

   Pension B, current value £400k, DC, current workplace pension being payed into by employer and me.

I wish to take 25% of Pension A only as tax free. For this I need to move this to a suitable personal pension to allow drawdown.

my questions are:

a) Is the 25% applicable to both pensions. Can I take 25% from pension B when I do retire tax free or will using it once on Pension A restrict me?

b) Will taking 25% from Pension A trigger MPAA and restrict my continued contributions to Pension B (or even pension A if wished to add funds)?

Thanks in advance.

Dazed_and_C0nfused

a).  Yes

b).  MPAA relates to (flexibly) taking taxable income from the pension.  Which you don't seem to be planning on doing.

Remember there is a limit of ~£268k for tax fee cash.

Cobbler_tone

a) is yes, yes and no. Three questions.

LHW99

I wish to take 25% of Pension A only as tax free. For this I need to move this to a suitable personal pension to allow drawdown.

If you take tax-free money and put it back into a DC pension, surely you

a) Risk falling foul of recycling

b) Need to have enough earned income to cover the amount

c) Will only get 25% of that deposit out tax-free with the rest being taxable.

Surely you want to put the tax-free payment into an ISA / savings account / premium bonds, and pay yourself what ever you need whenever you need it?

carman100

LHW99 said:

I wish to take 25% of Pension A only as tax free. For this I need to move this to a suitable personal pension to allow drawdown.

If you take tax-free money and put it back into a DC pension, surely you

a) Risk falling foul of recycling

b) Need to have enough earned income to cover the amount

c) Will only get 25% of that deposit out tax-free with the rest being taxable.

Surely you want to put the tax-free payment into an ISA / savings account / premium bonds, and pay yourself what ever you need whenever you need it?

Taking out and putting back into a pension is not what I want to do, sorry if the question appeared that way. The money will be used elsewhere.

Thank you