Pensions and drawdown

[psychocandy]

OK I'm a bit stupid when it comes to pensions....

I've got a few left over permie ones. Most of it amalgamated into a SIPP.
I also currently work (for last few years) via umbrella and I pile a bit into their scheme. Its good because its a company scheme so any contrib go in before employer NI as well.

Anyway, few years I'm 55.

Am I right I can take 25% out tax free at this point? And keep working?

Apart from less in your pension fund going forward, does it then continue as normal? It is a one-off deal this withdrawal or can you withdraw 25% of the total in the future too?

OK, I know there are limits to what you can contribute but whats stopping you paying in the max for the few months before you're 55 knowing that in a bit you can have 25% of it back tax free?

If you can do this seems a no brainer. With employer NI, employee NI, upper rate tax you're losing more than half anyway....

[WordIsBond]

OK I'm a bit stupid when it comes to pensions....

Why sell yourself short with the "when" restriction?

I also currently work (for last few years) via umbrella and I pile a bit into their scheme. Its good because its a company scheme so any contrib go in before employer NI as well.

This is not stupid, this is smart.

Anyway, few years I'm 55.

Am I right I can take 25% out tax free at this point? And keep working?

Time to get smarter. Request your guide from HL.

[JohntheBike]

OK I'm a bit stupid when it comes to pensions....

I've got a few left over permie ones. Most of it amalgamated into a SIPP.
I also currently work (for last few years) via umbrella and I pile a bit into their scheme. Its good because its a company scheme so any contrib go in before employer NI as well.

Anyway, few years I'm 55.

Am I right I can take 25% out tax free at this point? And keep working?

Apart from less in your pension fund going forward, does it then continue as normal? It is a one-off deal this withdrawal or can you withdraw 25% of the total in the future too?

OK, I know there are limits to what you can contribute but whats stopping you paying in the max for the few months before you're 55 knowing that in a bit you can have 25% of it back tax free?

If you can do this seems a no brainer. With employer NI, employee NI, upper rate tax you're losing more than half anyway....

My advice is that you should clarify with the pension provider what the terms of the fund are and especially engage with an accredited IFA to advise you.

Don't forget to consider a draw down scheme, which has been pretty beneficial for me.

[Si666]

My understand is that 25% of the entire pension pot can be drawn tax free. So if you have 200k @ 55 and take 25%, then at 65 you can draw 25% of everything above 150k and not pay tax on it. As stated above, probably best to check with an SME.

[Peoplesoft bloke]

Apart from less in your pension fund going forward, does it then continue as normal? It is a one-off deal this withdrawal or can you withdraw 25% of the total in the future too?

.

It's a one-off deal - I am also pretty sure it invokes a much lower annual contribution limit too as soon as you do it - obvs HMRC have spotted that otherwise you could just keep paying yourself via the pension indefinitely.

[psychocandy]

Why sell yourself short with the "when" restriction?

Why thanks you Wordie! (NLUK 2)

[psychocandy]

It's a one-off deal - I am also pretty sure it invokes a much lower annual contribution limit too as soon as you do it - obvs HMRC have spotted that otherwise you could just keep paying yourself via the pension indefinitely.

Yes I read something about the contrib limit changing from 40k to 4k.

Like you said, lump it all in take it out next year.

[adubya]

Good little article Tax you pay on your pension - Pension Wise

You can either take 25% tax free in one hit or take out chunks of cash with 25% of each chunk being tax free.