Which way to tackle drawdown, turning 55, during first tax year ?

Sea_Shell

Do Aviva allow one off lump sums, whilst a monthly drawdown schedule is in place?

All from crystallised funds.

Sea_Shell

molerat said:

My SIL still has a code allocated against her last job which finished in 2020.

The main pointer for OP is under no circumstances do 4.  Around £4k tax would be deducted and it would take a while to get it back.

Interesting that you say this.   I thought that by taking a lump sum in the last month of the tax year, it would actually avoid tax being deducted, because, there are no further months left even if they assumed I would be getting that amount every month.

Or is it because they'd carry that amount over in to 27/28?

Dazed_and_C0nfused

Sea_Shell said:

molerat said:

My SIL still has a code allocated against her last job which finished in 2020.

The main pointer for OP is under no circumstances do 4.  Around £4k tax would be deducted and it would take a while to get it back.

Interesting that you say this.   I thought that by taking a lump sum in the last month of the tax year, it would actually avoid tax being deducted, because, there are no further months left even if they assumed I would be getting that amount every month.

Or is it because they'd carry that amount over in to 27/28?

It's because for this type of pension the first payment the tax code the pension payer uses should always be the emergency code (1257L) on a non cumulative basis.

So on a taxable payment of £12,570 you would get £1,048 with no tax deducted and then a mix of 20%, 40% and 45% deducted from the remaining £11,522.

zagfles

Sea_Shell said:

I was just after the best way to draw it during that mid tax year, so tax didn't get deducted and then need reclaiming.

Provided that you get the tax code sorted before the last payday in the tax year, it makes no difference overall how you draw the £12570 over the 4 months. Worst case is you'd pay some tax at first and then get it refunded (automatically through PAYE).

For instance if you chose option 3 you'd pay £418 in tax the first month but then get it all refunded the second month assuming the tax code was sorted by then. 

doodling

Hi,

Not directly relevant to your question, but just a quick check - will you have a period after 06/04/2028, until your birthday, when you will not be able to access some or all of your pensions as a result of the changes in minimum pension age?  If you will, have you planned for it?

Sea_Shell

doodling said:

Hi,

Not directly relevant to your question, but just a quick check - will you have a period after 06/04/2028, until your birthday, when you will not be able to access some or all of your pensions as a result of the changes in minimum pension age?  If you will, have you planned for it?

Hopefully not, as I'm planning to do standard regular monthly drawdown from April 27.

But this anomaly has been discussed in another thread.  The upshot is that we THINK we'll be ok if already in DD.

I could come unstuck if I didn't start DD before the age change.

I have plenty of ISA backup if pension is temporarily unavailable 😉

Silvertabby

Sea_Shell said:

doodling said:

Hi,

Not directly relevant to your question, but just a quick check - will you have a period after 06/04/2028, until your birthday, when you will not be able to access some or all of your pensions as a result of the changes in minimum pension age?  If you will, have you planned for it?

Hopefully not, as I'm planning to do standard regular monthly drawdown from April 27.

But this anomaly has been discussed in another thread.  The upshot is that we THINK we'll be ok if already in DD.

I could come unstuck if I didn't start DD before the age change.

I have plenty of ISA backup if pension is temporarily unavailable 😉

Are you sure that those already in DD won't be affected by the minimum age change?  I thought that hadn't been clarified yet.

The last minimum age increase (50 to 55 in 2010) didn't affect those already in receipt of DB pensions or annuities, but DD wasn't so much of a thing back then.

Sea_Shell

Silvertabby said:

Sea_Shell said:

doodling said:

Hi,

Not directly relevant to your question, but just a quick check - will you have a period after 06/04/2028, until your birthday, when you will not be able to access some or all of your pensions as a result of the changes in minimum pension age?  If you will, have you planned for it?

Hopefully not, as I'm planning to do standard regular monthly drawdown from April 27.

But this anomaly has been discussed in another thread.  The upshot is that we THINK we'll be ok if already in DD.

I could come unstuck if I didn't start DD before the age change.

I have plenty of ISA backup if pension is temporarily unavailable 😉

Are you sure that those already in DD won't be affected by the minimum age change?  I thought that hadn't been clarified yet.

The last minimum age increase (50 to 55 in 2010) didn't affect those already in receipt of DB pensions or annuities, but DD wasn't so much of a thing back then.

No, we're not 100% sure yet, I don't think.

It would seem very strange to have to pause DD for some interim months, whilst you're technically not old enough.

Time will tell.

But I think if you don't start at 55, then after the change, you might have to wait until you turn 57.

doodling

Hi,

Sea_Shell said:

Silvertabby said:

Sea_Shell said:

doodling said:

Hi,

Not directly relevant to your question, but just a quick check - will you have a period after 06/04/2028, until your birthday, when you will not be able to access some or all of your pensions as a result of the changes in minimum pension age?  If you will, have you planned for it?

Hopefully not, as I'm planning to do standard regular monthly drawdown from April 27.

But this anomaly has been discussed in another thread.  The upshot is that we THINK we'll be ok if already in DD.

I could come unstuck if I didn't start DD before the age change.

I have plenty of ISA backup if pension is temporarily unavailable 😉

Are you sure that those already in DD won't be affected by the minimum age change?  I thought that hadn't been clarified yet.

The last minimum age increase (50 to 55 in 2010) didn't affect those already in receipt of DB pensions or annuities, but DD wasn't so much of a thing back then.

No, we're not 100% sure yet, I don't think.

It would seem very strange to have to pause DD for some interim months, whilst you're technically not old enough.

Time will tell.

But I think if you don't start at 55, then after the change, you might have to wait until you turn 57.

Have you seen something which supports those assumptions?  I agree they seem logical but that doesn't mean they are right 

Sea_Shell

I've got all my info (disinformation? 😉) from this thread...


https://forums.moneysavingexpert.com/discussion/6516725/what-happens-if-you-straddle-pension-age-increase#latest