I understand that from next April people will be able to take all of their pension pot without having to buy an annuity so they can handle their own affairs.
I have an old pension saving of £49,000 maturing at the end of next month and I wondered if I would have to pay tax on this.
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The taxation of your pension will be as earned income, you will be able to take a quarter of you fund tax-free if you choose. (perhaps slightly more if it is a really old plan- speak to your provider or adviser about the s226 tax legislation)
You will be taxed at your highest marginal rate on income from an annuity or from a drawdown plan,
You can defer drawing your pension by transferring your pot to a new style plan (if the old plan has no facility to defer drawing your money.
However there are things to think about
The "old pension" may have some very old-fashioned features which you might value
1. Guaranteed annuity rates which make annuities a more attractive option
2. Life cover or ill health benefits
These "old" plans need to be treated as if they might be valuable antiques and I would strongly suggest you take expert advice from someone who specialises in this work.
I am not an adviser- this is no advice - but I am sure there are advisers on here who can help you - if you don't get any offers- please drop me a line and I'll find you one in your area. [email protected]
If you have a guaranteed pension income (including the State Pension) of more than £12,000 for 2014-15, you can access all of your pension pot now instead of waiting for 6 April 2015.
Whether it is a prudent choice is another matter.
Henry Tapper's point about checking the policy for higher guaranteed annuity rates etc is an important one - I have come across several clients recently with such valuable guarantees.