Omega Owners Forum
Chat Area => General Discussion Area => Topic started by: biggriffin on 23 January 2020, 21:57:51
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Now I know we have a few members who are financially astute, I'm not one of them,
Yes I know an IFA is the way to go, but I can't find the answer to a simple question, which is.
Can I take some cash from my pension, and still keep my pension running.. I have 1 pension which I don't pay into anymore, Largest pot.. and a workplace current one, iwant to take some money from the static pension... Please keep it simple, :y
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Only if you're over 55. If you're 54, you can't ;)
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Only if you're over 55. If you're 54, you can't ;)
Yup that I do know. :y
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Only if you're over 55. If you're 54, you can't ;)
Unless you can convince HMRC you're terminally ill. Given you have to provide evidence of this, I hope Dr He's answer still applies. :y
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Well, you said keep it simple... ::)
If you're over 55, move all the static stuff to something like a Fidelity SIPP, and before you invest the part you want to keep, cash out what you want to pull out of it. ;)
If you're not yet 55, in the UK, you cannot touch it.
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Well, you said keep it simple... ::)
If you're over 55, move all the static stuff to something like a Fidelity SIPP, and before you invest the part you want to keep, cash out what you want to pull out of it. ;)
If you're not yet 55, in the UK, you cannot touch it.
Don't want to go that route, just want to take out some cash for home improvements, and that's it, leave the rest alone.
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You've ignored the fundamental point... your age.
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As others have asked - How old are you? If you aren't 55 yet, forget it till you are.
You also refer to a 'pot'. I assume that means it's a real pot of money/investments - called a Defined Contribution Pension. Private Pensions, SIPPs and Stakeholder are the 3 main types of DC Pension. If it's not a DC pension , and it's a Defined Benefit/Final Salary scheme then you'll need to refer to the rules of the scheme to see when/how you can access it. Public sector schemes are usually DB not DC - Things like Police, Fire, NHS, Local Govt, Teaching etc are all DB not DC.
So, assuming it really is a DC scheme, and you're over 55, then you can take (up to) 25% of the pot tax free. You can also take none/some/all of the remaining 75% at any time, but...
1) You will pay tax on any/all of the 75% you take. It is counted as income, so you pay income tax at whatever rate applies.
2) If you take ANY money from the 75% you are limited to what you can continue to pay into any future pension to £4000 p/a.
3) You don't get to take a second 25% of the remaining 75% tax free next tax year. You only get one 25% bite of the cherry.
If you don't touch the remaining 75% then you can continue to put more than £4K p/a into your other pensions.
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Well, you said keep it simple... ::)
If you're over 55, move all the static stuff to something like a Fidelity SIPP, and before you invest the part you want to keep, cash out what you want to pull out of it. ;)
If you're not yet 55, in the UK, you cannot touch it.
Don't want to go that route, just want to take out some cash for home improvements, and that's it, leave the rest alone.
You might not be able to do that - it'll depend what features are supported by the scheme that the pot is currently with.
Whilst the new-ish pension rule/law changes do allow you to take the tax free 25% and leave the rest invested, there is no obligation on pension providers to support all the new rules. If your scheme is an old one, it may well not support new options like flexible access or drawdown. It may only support the old default, which was taking the 25% and then buying an annuity with the remaining 75%. That's not what you want.
If the current scheme does not support the new rules that you want to use, then your only option is to transfer the pot into a scheme that does support the new features. That's what DG means by moving the pot into a Fidelity SIPP. Whether Fidelity is the cheapest or most cost efficient provider for doing what you want is another question though.
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If you can, cash it and blow it on booze, coke and hookers! :y
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If you don't touch the remaining 75% then you can continue to put more than £4K p/a into your other pensions.
You learn something new every day,.thanks for that :y
Would I be correct in assuming this has no effect on the Lifetime Allowance?
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If you can, cash it and blow it on booze, coke and hookers a Morris Marina! :y
FTFY :y
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If you can, cash it and blow it on booze, coke and hookers a Morris Marina! :y
FTFY :y
Yes a wiser investment. :y
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I know this is going to make it more complicated but there are a couple of misunderstandings above.
The £4K allowance applies in a different set of circumstances than just not touching the 75%
https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance/amp
Second and this is a common misunderstanding, it is an allowance not a limit. You can even in those circumstances described above, contribute more than £4K but the tax relief is limited to £4K of contributions and remember for the purpose of the allowance employer contributions are included
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You also refer to a 'pot'. I assume that means it's a real pot of money/investments - called a Defined Contribution Pension. Private Pensions, SIPPs and Stakeholder are the 3 main types of DC Pension. If it's not a DC pension ,
The three main types of defined contribution plan used in the workplace are : trust based, group personal pension and master trust. Group SIPP is not that popular and stakeholder is an obsolete product
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I know this is going to make it more complicated but there are a couple of misunderstandings above.
The £4K allowance applies in a different set of circumstances than just not touching the 75%
https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance/amp
Second and this is a common misunderstanding, it is an allowance not a limit. You can even in those circumstances described above, contribute more than £4K but the tax relief is limited to £4K of contributions and remember for the purpose of the allowance employer contributions are included
Ok I over simplified. However there is rarely any point in putting your own money into a pension if you don't get the tax relief on the way in, but are then taxed on (75% of) the money you take out.
You also refer to a 'pot'. I assume that means it's a real pot of money/investments - called a Defined Contribution Pension. Private Pensions, SIPPs and Stakeholder are the 3 main types of DC Pension. If it's not a DC pension ,
The three main types of defined contribution plan used in the workplace are : trust based, group personal pension and master trust. Group SIPP is not that popular and stakeholder is an obsolete product
The OP is talking about an old pension scheme, so whilst Stakeholder may be obsolete today, it's is a possibility.
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If you don't touch the remaining 75% then you can continue to put more than £4K p/a into your other pensions.
You learn something new every day,.thanks for that :y
Would I be correct in assuming this has no effect on the Lifetime Allowance?
There is no direct link between paying money into a pension and the LTA.
It only kicks in if you "crystallise" more than (currently) £1.055 million of pension pot. Crystallise basically means 'cash in', so you can take out up to £263K tax free, and up to £791K as taxable income. After you've taken that amount out there is no more 25% tax free, and there is an additional 25% 'tax' charge on 100% of the remainder/excess.
If the combined value of all your pension pots looks likely to approach £1M+ then you'd be a fool not to see an IFA now!
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Spoken to my pension provider, and I can withdraw up to 25% without having to move what's left in the pot.. Which is what I was wanting to do.
Know do I buy a Marina, a vxrV8 or the new bathroom... It's a tough decision. I know what that wurzel would say. My heart says V8, my life expectancy says Bathroom. ;D
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Empty the lot and only pay tax on it once at this year's rate rather than constantly paying tax on the annuity. Reinvest it post tax and you'll only pay tax on the gain, and then only when you draw it down...
Capital gains is significantly less than higher rate income tax.
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Empty the lot and only pay tax on it once at this year's rate rather than constantly paying tax on the annuity. Reinvest it post tax and you'll only pay tax on the gain, and then only when you draw it down...
Capital gains is significantly less than higher rate income tax.
That depends how much money is in the pot, and how much you currently earn from the day job. If it's (say) £20K then you can take £5K tax free and the other £15K at your current tax rate - so you would possibly only pay 20% tax on it (depends what other income you have this year).
However, if there is (say) £100K in the pot, then you can take £25K tax free, and the rest is taxable. You will pay 40% tax on at least some, and perhaps all of it - a tax bill of £30K.
If there is £1M in the pot, then £250K is tax free and the other £750K is taxable. You'll pay 45% on most of that - so you'll get a tax bill of up to £337K :o.
The purpose of a pension is to provide you an income once you stop working. Taking taxable money out of the pension whilst you are still working means you will pay un-necessary tax. If you wait till you stop working then you'll have all of your personal tax allowance (£12K) and all of your 20% tax band (£38K) to withdraw the balance without pushing you into the 40/45% tax bands.
You don't have to buy an annuity any more, although they are still suitable for very risk averse people. There is (usually) no point in taking taxable money out of a pension to put it into investments. You can buy most investments inside the pension, and inside the pension they grow tax free and with no CGT.
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There's that... I may have confused it with an reasonable inheritance.
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There's that... I may have confused it with an reasonable inheritance.
And since you mention inheritance...
Most personal pensions can be inherited completely tax free by whoever the deceased nominates - either as cash or a pension pot for themselves. No death/inheritance payable by the deceased's estate, and no income tax or CGT for the person that inherits.
Another reason not to take money out of the pension wrapper if you'd like the remainder of your money to pass tax free directly to someone else when you expire.
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now do I buy a Marina, a vxrV8 or the new bathroom... It's a tough decision. I know what that wurzel would say. My heart says V8, my life expectancy says Bathroom. ;D
Invest wisely and you can have the best of all 3 :)
Visit your local pound shop, buy 4 buckets and a pack of 3 car sponges ,total investment £5
1 bucket to wash in with 1 sponge cut up ,1 bucket to sh!t in (don't get them mixed up)
2 buckets and 2 sponges to wash the VXR8 with
then look at a pic of a morris marina online if you must ::)
my brother and his wife are both accountants and i'm sure neither would dare to argue with my logic :y
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If the combined value of all your pension pots looks likely to approach £1M+ then you'd be a fool not to see an IFA now!
I hope this is very likely, but as I'm only 35, I feel I have time yet. :y
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If the combined value of all your pension pots looks likely to approach £1M+ then you'd be a fool not to see an IFA now!
I hope this is very likely, but as I'm only 35, I feel I have time yet. :y
Well....not to put too finer point on it, Jimmy, and in no way meaning to be disrespectful, do something to make sure you live to see it. :)
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If the combined value of all your pension pots looks likely to approach £1M+ then you'd be a fool not to see an IFA now!
I hope this is very likely, but as I'm only 35, I feel I have time yet. :y
Well....not to put too finer point on it, ...
Say I'm the only bee in your bonnet?
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Blue canary in the outlet by the light switch...
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If the combined value of all your pension pots looks likely to approach £1M+ then you'd be a fool not to see an IFA now!
I hope this is very likely, but as I'm only 35, I feel I have time yet. :y
Well....not to put too finer point on it, ...
Say I'm the only bee in your bonnet?
Same goes for you, you both need a kick up the arse ;D
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If the combined value of all your pension pots looks likely to approach £1M+ then you'd be a fool not to see an IFA now!
I hope this is very likely, but as I'm only 35, I feel I have time yet. :y
Well....not to put too finer point on it, ...
Say I'm the only bee in your bonnet?
Same goes for you, you both need a kick up the arse ;D
Went back to fat club last night and I'm back to where we started (not originally, I'm still ~4st lighter than that) last year, so yep.. definitely need a kick up the arse. We're back to cooking properly (i.e. everything from scratch) again with no fat, oil, blah blah .. basically all the fun stuff taken out ;D
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It's all about behavioural change, so mostly mindset :y
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It's really hard, Aaron, I know this from friends and family, but it's got to be done. When I packed up drinking, it was difficult, but when I packed up smoking, that was something else. It was the most difficult thing I've ever had to do. Dieting is even harder, because we all have to eat to live, and the fact that it's an obsession with most people these days doesn't help. Fickin cookery programmes on every day.
But the truth is, if I hadn't packed up when I did (50 a day!), then there's a good chance I wouldn't be here. I came to realise that the reason I was always making excuses not to pack it in was because I was scared, yes, scared of losing a really good friend. I thought it would be impossible. I even thought I'd rather die than pack it in, how f**kin pathetic is that?
It's no good saying that, eventually, you will stop craving, because you never do. Even after 16 years, I still think I'd love a ciggie sometimes. It's a battle you can win, but it's a constant battle.
Alcoholics are taught to take one day at a time, and that's pretty much the same with everything.
I was gonna say 'reward yourself' for small victories, but you already spoil yourself rotten ;D
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I love the way this forum, can go so off topic, other forums, the admins lock off topic,, But this is oof, keep it up. Long live the Marina ;D