tax free 25%

[Dave]

Hi all
I have a L&G DC pension worth around £400,000 and I presumed I could take the 25% tax free part out over one year (next financial year).

But when I look at the details of my policy, it seems to say that I can take money out, and that 25% of that withdrawal would be tax free.

Is there any way I can just take the 25% tax free chunk out in one (or two) tax years and then drawdown the rest as and when I like into the future?

Or is that just not how these things work.

Ta

[BullDog]

Yes you can.

[swill453]

There's just been a feature on Radio 4 where a listener was complaining that none of his four pension providers would allow him to just take the 25% tax free and leave the rest in for future drawdown. They were all insisting he immediately withdrew the whole pension (with a massive tax bill of course).

He had to transfer them all to a pension provider that would allow it, which took months.

Not all pension providers offer all the "pension freedom" facilities.

PS. This should probably be on the Pensions Practical board viewforum.php?f=17

Scott.

[Alaric]

He had to transfer them all to a pension provider that would allow it, which took months.

If you want to take part of the 25% one tax year and the balance the next, it's likely to need two SIPPs. Some providers will make that facility available in house behind the scenes.

[swill453]

If you want to take part of the 25% one tax year and the balance the next, it's likely to need two SIPPs. Some providers will make that facility available in house behind the scenes.

Aj Bell Youinvest SIPP give complete flexibility over how much 25% tax free you want at a time. You could take it in monthly chunks if you want, and they make no charges for this.

Scott. (Youinvest user)

[NearlyThere]

I have done this with Interactive Investor with no problem.

[Lanark]

This Gov.uk page
https://www.gov.uk/tax-on-pension/tax-free
is very different to the HL advice
https://www.hl.co.uk/retirement/prepari ... -free-cash
and money helper
https://www.moneyhelper.org.uk/en/pensi ... -lump-sums

Perhaps the rules have changed?

[swill453]

This Gov.uk page
https://www.gov.uk/tax-on-pension/tax-free
is very different to the HL advice
https://www.hl.co.uk/retirement/prepari ... -free-cash
and money helper
https://www.moneyhelper.org.uk/en/pensi ... -lump-sums

Perhaps the rules have changed?

I can't see any specific contradictions between any of these links. Perhaps you could state what you think is different?

Scott.

[Kantwebefriends]

If I were going to transfer an "L&G DC pension worth around £400,000" I'd be tempted to split it over two new providers. A bit of provider diversification would comfort me and at pretty low cost.

[swill453]

If I were going to transfer an "L&G DC pension worth around £400,000" I'd be tempted to split it over two new providers. A bit of provider diversification would comfort me and at pretty low cost.

On the other hand, I would (and have) consolidated multiple pensions into one for ease of administration, and a total of £400,000 or more wouldn't bother me.

Scott.

[xxd09]

Just a practical point that might help
When I retired I took the 25% tax free sum which would be similar to Dave,s in amount
I lived on this for some years as I adjusted to retirement
Left remaining pension and savings to grow
It turned out a good way to ease into retirement without immediate money/cash flow worries
xxd09

[swill453]

Just a practical point that might help
When I retired I took the 25% tax free sum which would be similar to Dave,s in amount
I lived on this for some years as I adjusted to retirement
Left remaining pension and savings to grow
It turned out a good way to ease into retirement without immediate money/cash flow worries

I hope you didn't "waste" the other £12,570 per year (at today's rate) you could also have tax-free via the Personal Allowance?

Scott.

[monabri]

Won't L&G have a pensions helpline? He could phone them up to confirm that he could take upto 25% of the pot tax free over n years leaving the balance to be drawn later and potentially using the personal allowance to mitigate some tax in the future.

[swill453]

Won't L&G have a pensions helpline? He could phone them up to confirm that he could take upto 25% of the pot tax free over n years leaving the balance to be drawn later and potentially using the personal allowance to mitigate some tax in the future.

It seems that's exactly what can be done, but I agree best to confirm.

"Pension Drawdown lets you access 25% cash tax-free from your Defined Contribution pension pots and leave the rest invested, giving you the flexibility to choose how and when you withdraw the rest of the money." https://www.legalandgeneral.com/retirem ... -drawdown/

Scott.

[xxd09]

Hi swill453
Looking back -now 76-20 yrs retd-I did!
Perhaps leaving remaining pension alone to grow-a SIPP with equities/bonds compensated a little
Certainly PA wasn’t wasted after tax free money used up -3/4 years I think looking back
You live and learn!
xxd09

[BullDog]

Just to mention in passing the MPAA. Or Money Purchase Annual Allowance. It's fine to take the 25% lump sum from the pension and keep contributing as normal. But take even 1p over the tax free lump sum and it triggers the MPAA which severely limits any further contributions to a pension.

[xxd09]

A further thought
I should have drawn out the PA as well as well as the 25% tax free allowance and invested it in my ISA!
Due a previous poster however in Motley Fool days got my wife and I out of the Equitable Life intact!
Moral-read your Lemon Fool posts
The Bogleheads forum is also good
xxd09

[AWOL]

A further thought
I should have drawn out the PA as well as well as the 25% tax free allowance and invested it in my ISA!
Due a previous poster however in Motley Fool days got my wife and I out of the Equitable Life intact!
Moral-read your Lemon Fool posts
The Bogleheads forum is also good
xxd09

Equitable Life with profits was a painful lesson for me.

[xxd09]

Sorry to hear that
I was all with profits insurance companies back in the day-nothing else available for amateurs-exited them all as they went public
Then to investment trusts till I discovered they all were expensive closet global index trackers
Finally into a global equities index tracker via John Bogles books and Vanguard
Now been that way for many many years -simple cheap easy to understand
It’s done the job for me-now76-retd 18 yrs
But I had to learn for myself along the way as you have done
It’s a road we all have to travel-keep posting and reading
xxd09