Yes I know these are basic questions but......

af1963

https://forums.moneysavingexpert.com/discussion/comment/81942847#Comment_81942847

You are also postponing taking the money to a later date, and depending on the choices you make later, that may allow you to take some of it at a time when you have little or no other taxable income - which lets you take even more of it tax free within your tax allowance.

Once state pension starts, for many people, that will absorb all the tax allowance. But if you are retiring before state pension age there can be several years where you have a £12570 allowance to use.

micklesthwaite

Thanks af, yes, that's a great point.

So if you have £200K in your pot and take the 25% tax free lump sum at say 63, you can then divide that by 4 and have 12,500 per year plus 12570 a year draw down, giving you 25,070 of income free of tax for 4 years until you get the state pension?

Is that correct?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81944343#Comment_81944343

Yes that should be possible with most pension providers. Some older pensions are limited in their withdrawal options so you would need to check.

It might be easier not to take the whole 25% tax free at once, as you will have to keep it somewhere, but just take some each year. Maybe even leave some for after the SP arrives.