Pension and retirement options - lump sum payments

Talk to our team

05 January 2018

Services:

Wealth planning & Private client,

Personal Tax Planning

Further to our recent blog on the main Pension options available at retirement, we now look more closely at the first of these choices lump sum payments, the pros and cons of this option and how it may impact on you.

Tax free cash

You are able to take up to 25% of your pension fund free of any tax. Many people utilise this option to pay off their mortgage, help their children get on the property ladder, or maybe reward themselves with a nice holiday after all the hard work!

You don't need to take the cash as one payment - if it is preferable you can spread the withdrawals over several years up to the 25% total.

Unlimited withdrawals

Furthermore, if your provider allows it, you can make unlimited withdrawals in excess of your 25% tax-free amount. However, if you are thinking of this you need to be mindful that your pension may need to provide an income for the rest of your life and payments in excess of your 25% will be taxed as income at your marginal rate.

As with other pension options, it is best to take professional advice before making any decisions - particularly if you will be taking more than 25% of your pension.

Contact Us

We recommend our clients to Tilney, one of the UK’s leading private client investment and wealth management company who provide top quality, solid and practical pensions advice.

To discuss tax on pensions, auto enrolment, defined contribution, defined benefits, transfer values or any other advice please contact Charles Coade direct on 0113 224 5544 or email charles.coade@tilney.co.uk or via our Leeds office on 0113 398 1100 or email leeds@hwca.com