Pensions

[Fred Bloggs]

Rather depends if you want to pay tax on it or not.

For example, if you have £100k in a fund, at age 55 take out £25k in cash tax free, the rest you reinvest. However that has to be labelled as "Pension Fund" in some way so it's ring-fenced for later pension investment (hopefully not an annuity!). Anything else and it's earned income so taxable.

So not quite so stupid, is it?

Yep. That's a good plan and one that I am currently working on. I'm 53 so I was able to take 25% of my fund as cash before April 5th this year. The year after next (55 y.o.) I'll be able to take another £25 to £30k tax free from that which is building up in the SIPP right now. This is my plan and I think that the way it is working I'll be increasing my SIPP payments to the extent that eventually virtually all my turn over will be going to into the SIPP while pulling out my 25% lump sums every couple of years. Legislation continuing to allow this of course.