Gryffron is 55

[gryffron]

At last I can get my hands on that cash I stashed in a Pension decades ago. Currently about £90k in an AJBell SIPP.

So who decides WHEN I crystallise the TFLS? Do I just pick a date and tell AJBell?
After that, can I just withdraw as I see fit? Subject to it all being taxable.

Currently I have total taxable income of about £6k, mostly dividends outside tax shelters. Plus capital sales all below allowances. So I reckon I can take £22.5k TFLS plus £7k taxable from pension this (tax) year, and still be within allowances (£11k + £2k). Does that sound right?

I'm planning to get as much as possible out of the Pension at zero tax before I turn 67 and the State Pension (max) bumps my taxable income right up.

I don't need any extra cash to live on. Just thinking about how to optimise withdrawals from the Pension.

Any advice welcome. Thanks in advance.

Gryff

[Howard]

This may seem obvious, but in a similar situation to you years ago, I rang AJ Bell and had a conversation with one of their customer service advisors. Obviously they didn't give advice, but gave me some "guidance" on my options and what instructions I could give them which I found helpful.

I took out the full 25% tax free allowance and invested it gradually in ISAs and haven't regretted it!

Others, more knowledgeable than me may be able to help on framing the questions you may wish to ask.

Oh! And enjoy your retirement .

regards

Howard

[swill453]

On the AJBell web site you can get an illustration and follow it through by filling in the form to get your lump sum and start a regular drawdown (monthly or annually).

The govmnt have announced a budget in March, I guess it's conceivable they could change the 2020/21 personal allowance, which has been previously announced to be the same as this year - £12,500. It's easy to change the payments online when in drawdown though.

Note, in case you're unaware, it's your responsibility to liquidate investments in time for AJBell to pay out. If the money's not there in cash they'll simply do nothing.

Scott.

[PinkDalek]

[Currently I have total taxable income of about £6k, mostly dividends outside tax shelters. Plus capital sales all below allowances. So I reckon I can take £22.5k TFLS plus £7k taxable from pension this (tax) year, and still be within allowances (£11k + £2k). Does that sound right?

Probably a question for the Taxes board but it looks about right, although the 2019-20 Personal Allowance (unless in Scotland) is £12,500:

https://www.gov.uk/income-tax-rates

[Kantwebefriends]

It sounds to me as if you might even have room to pay an annual £2,880 net into your SIPP with a view to drawing the resulting £3,600 before you begin your state pension. A tax-free profit of £720 is a pretty good reward for a few minutes of activity.

[swill453]

although the 2019-20 Personal Allowance (unless in Scotland) is £12,500:

https://www.gov.uk/income-tax-rates

The Personal Allowance is still £12,500 in Scotland, it's only above that they start fiddling with things.

Scott.

[Pheidippides]

Happy Birthday Gryffron - Pheidippides is 55 also today....

A week ago I called Pension Wise, Fidelity was yesterday and Standard Life and AJ Bell was today.

A LOT of the same information, 99% of which I knew already. However, I can see the benefit of the spiel to the less-well-informed (i.e. non-Fools)

Fidelity send you a comprehensive pack and then the spiel is limited

Standard Life is two 20-minute phone calls (one down, one to go) before cash can be released (this level of "service" is dependent on whether your total pension fund value is greater than 350K). Lower than this you can do the whole thing online...

AJ Bell - The call I made was limited to questions about transfers, but the online questionnaire for TFLS is fairly comprehensive.

Regards and best wishes for our collective futures

Pheid

[Alaric]

So I reckon I can take £22.5k TFLS plus £7k taxable from pension this (tax) year, and still be within allowances (£11k + £2k). Does that sound right?

The increases in personal allowances over recent years coupled with "pension freedom" have had the side effect of making it feasible to finance early retirement from pension assets without paying tax. So there was tax relief on the way in and no tax on the way out.

It works well if you have enough wealth to finance your lifestyle from capital, given the annual CGT allowance, or ISAs for that matter.

[gryffron]

Thanks everyone. There was some useful info there. Recs all round.
I have freed up the funds today (thanks for the warning on that one Scott)
I will fill in the questionnaire and file for the cash as soon as the funds clear.

@Howard: I've been enjoying my retirement for years thanks to all the good advice I have received from many Fools over many years. Hence the sanity check before action. Thanks anyway.

@Kantwebefriends; Yes, it might be possible to squeeze a few more quid out of Pension rules, but I don't think I'll bother. Too frustrated with Pensions rule changes after they stiffed me on taking my Pension at 50. I'd rather just clear it out.

@Alaric: Yes, exactly as you say. All this cash went into the Pension when I was an employee on 40% tax. All being well I should get it all out tax free.

Happy Birthday to Pheidippides

Gryff

[swill453]

The increases in personal allowances over recent years coupled with "pension freedom" have had the side effect of making it feasible to finance early retirement from pension assets without paying tax. So there was tax relief on the way in and no tax on the way out.

Yes, I take the maximum as a UFPLS payment of £16,666 per annum currently. A couple doing that could get over £33,000, giving a reasonable lifestyle and paying no income tax whatsoever.

(I ease my conscience by paying plenty of excise duty )

Scott.