Personal pension

Personal pension

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I have a personal pension contribution which will matured at the age of 65.

At present my age is 56 years old and at present the pension pot amount is £ 28,000/-  can I withdraw part of the amount and still continue the pension contribution till the age of 65.

If yes kindly advice the procedure to withdraw the same.
Any help is highly appreciated.

Replies (11)

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By J_G_W
17th Dec 2014 13:27

You can access a pension from age 55, regardless of what age the plan is set up to mature at.

You can take 25% tax free and the residual amount can be left invested. You would require you policy to be transferred to a capped drawdown pension policy.

You need to be 60 to take the full amount through something known as triviality, so that isn't applicable to you. However, if you wait until April 2015 you could take the full fund in a lump sum. Again 25% would be tax free, 75% would be taxed at your marginal rate.

If you need assistance speak to you pension provider or an IFA.

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Replying to Clarkie73:
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By fiona4141
17th Dec 2014 20:02

thanks

After April 2015 even if I am not 60

1) Can I withdraw partly e.g 10k and continue to contribute to the pension fund? Will it have any impact on the maturity amount? It says that in drawdown the money are invested in shares so there is a risk in the future value of the pension fund.

2) Any maximum limit that I can withdraw yearly or can I access 10k yearly for another 3 years.

Thanks

 

 

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By zebaa
17th Dec 2014 15:51

Good answer...

...and better than my comment when I answered the same question - posted less then 24 hours apart - yesterday. Any reason you asked twice fionia4141 ?

 

 

 

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By J_G_W
18th Dec 2014 09:29

1) Yes you can take the money out in stages. There will be no maturity amount on your pension as you will need to move the one you have to a new pension called a flexible drawdown (if after April 2015 as mentioned). The maturity will depend on what funds you then invest in and the contributions you make. Yes, there is a risk with funds, however, you can invest as per your attitude to risk i.e. How much risk you are willing to take and your overall capacity for loss. Of course, with good fund, there is a direct link between risk and reward. 

2) No limit. You will get £10,500 tax free as that is your personal allowance (assuming no company car, or earning above £100k per annum etc). That's for all income sources, employment included etc. You don't pay National Insurance on pension income. You can take the full £10,000 in year one as tax free cash. Or by Phased drawdown, where you take £2,500 tax free and £7,500 as drawdown to use your personal allowance.

It all depends on your tax position and what you want to achieve.

If you take the tax free cash now you can keep your annual allowance (the maximum you can pay into a pension each year) at £40,000. If you take tax free cash after April 2015 your annual allowance will drop to £10,000.

This is just touching some of the areas to consider. I'm an IFA, this isn't really and accountants area. I would suggest speaking to someone if you're unsure. Even the pension providers have good technical areas if you know exactly what you want and don't have the money to pay for the advice.

 

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Replying to NH:
By Captainblack
20th Dec 2014 13:21

Slightly incorrect

Re

" ... If you take the tax free cash now you can keep your annual allowance (the maximum you can pay into a pension each year) at £40,000. If you take tax free cash after April 2015 your annual allowance will drop to £10,000..."

I don't think this is quite right. You can take the tax free cash after April 2015 and retain the £40k annual allowance BUT if you take even £0.01 in income (beyond the tax free cash) the allowance drops to £10,000. For many this will be a very important distinction!

Captain

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By fiona4141
18th Dec 2014 10:44

Thanks

If I require to withdraw in stages (in different years depending on my income level)  without opting for drawdown E.g 10K every year can I withdraw without affecting the value of the pension fund. If yes, kindly let me know the procedure.

Thanks

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Replying to johnhemming:
paddle steamer
By DJKL
20th Dec 2014 13:58

Depends

fiona4141 wrote:

If I require to withdraw in stages (in different years depending on my income level)  without opting for drawdown E.g 10K every year can I withdraw without affecting the value of the pension fund. If yes, kindly let me know the procedure.

Thanks

Any withdrawal will impact the value remaining, as it will be less. Think of a personal pension as a pot of investments, if you take from the pot the only way its value can remain constant is if the growth of that which remains within the pot is greater than the value of the withdrawal.

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By zebaa
20th Dec 2014 14:04

@captainblack

You said ...

 

You can take the tax free cash after April 2015 and retain the £40k annual allowance BUT if you take even £0.01 in income (beyond the tax free cash) the allowance drops to £10,000.

 

Can you give any reference on this please ?

 

 

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Replying to Red Leader:
By Captainblack
21st Dec 2014 16:10

Critical Point

Hi

It was a critical point to me, I spoke to a senior advisor at Hargreaves Lansdown.

it's covered by this document www.hl.co.uk/free-guides/new-pension-rules-changes-2015 (you will have to register on the site to download it unless you are a customer)

See "change 3" on page 2.

Hope that helps

Captain

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By J_G_W
22nd Dec 2014 09:20

No

Fiona has stated she wants to take £10,000. Her pension is worth £28,000. Tax free cash is only 25%, i.e. £7,000. As I said, if she takes £10,000 she will have a reduced annual allowance of £10,000.

If she does it now, its just a capped drawdown which means she would keep the £40,000 annual allowance. After April 2015 she would need a flexible drawdown which would mean a reduced annual allowance, hence why I highlighted the difference.

 

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Replying to SteveHa:
By Captainblack
22nd Dec 2014 09:25

I was replying to zebaa

J_G_W I was replying to zebaa.

Sorry for the confusion.

Captain

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