Pension 25%

af1963

Even if you don't need it - maybe because you've taken out enough tax free cash to live on - it's worth considering taking out enough taxable pension to use up your personal allowance.

The choice is:

take out £12.5k ( approx) each year as taxable income , but pay no tax on it because it is covered by your allowance

OR leave it in the pension and take it out later, either as drawdowns or by buying an annuity: in either case, if it pays out once your state pension has started, you'll pay about 20% of its value in tax.

If you don't need the cash to live on, stick it in an ISA.

Mrbeethoven

Depending on which provider the pension is with you don’t need to put the whole lot in drawdown in one go, you can do it in phases. Hargreaves Lansdown allow this but I don’t know about other providers.

Assuming you have no other taxable income and you wanted a tax-free/after-tax income of £16,000 you could put £16,000 of the total pot into drawdown (with the rest of the pot remaining invested, or as cash, inside an uncrystallised pension) then take £4,000 immediately as the 25% tax free. The remaining £12,000 could then be drawn as £1,000 per month for 12 months. This would be taxable but if you have no other taxable income then it would be fully covered by your personal allowance so there would be no tax to pay. In 12 months time put another £16,000 into drawdown and repeat the process.

dunstonh

Depending on which provider the pension is with you don’t need to put the whole lot in drawdown in one go, you can do it in phases. Hargreaves Lansdown allow this but I don’t know about other providers.

On modern plans that offer drawdown, virtually all of them allow phasing. Legacy plans may have limitations.

Veloflyer

https://forums.moneysavingexpert.com/discussion/6662015/pension-25

To echo other comments - My aim is to drawdown 25K TFLS/ann and take @12.5K as income - keeping under the PA. That should cover my basic spend/ann. Clearly you may need more or less TFLS, but perhaps start with at least 12.5K from income - the crystallized bit from drawdown- and work from there. I will only take what I need each year - phased drawdown? - leaving the rest in inflation linked gilts.

For tax efficiency make use of the PA each year.

GDB2222

https://forums.moneysavingexpert.com/discussion/comment/81948796#Comment_81948796

All my plans are legacy plans. The two I am currently looking at carefully are with Standard Life and Scottish Widows, and they will simply transfer the funds into their modern plan. There doesn’t seem to be any initial charge and the annual charges are comparable to the legacy plans. I haven’t yet found any snags but maybe I’ve missed something.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81949280#Comment_81949280

Hardly anyone has initial charges nowadays (there are a few notable exceptions). You need to be on guard that those plans are not limited themselves. They certainly will be on investment choice but they may be in functionality as well. That may suit you but don't assume that they at the better end of the marketplace.