The April 2015 changes to pensions granted over 55’s the right to access their pension funds in a way that they choose. To take your whole pension pot as cash you simply close your pension pot and withdraw it in part or all as cash.
Why take money from your pension pot?
You may want to draw cash from your pension pot for such reasons as:
– pay off debts
– cut down on your working hours
– renovations/large purchases/investing (buy to let deposit)
– cash gift to a family member
The first 25% (quarter) will be tax-free. The remaining 75% will be taxed at your highest tax rate – by adding it to the rest of your income. So 75% of the amount you withdraw counts as taxable income. It is highly likely this will increase your tax rate when added to your other income.
What happens when you die?
Any remaining cash or investments from the money that came from your pension pot will count as part of your estate for Inheritance Tax purposes. Please see our article Leave More To Your Loved Ones By Covering Inheritance Tax Liability for further reading.
A professional pension adviser will help you access your pension funds and answer your questions:
– Can You Take a Cash Withdrawal From Your Pension Fund?
– How Much Income Can You Draw From Your Pension?
– Change Your Income Amount as Often as You Choose?
Please check the adviser you speak to is regulated by the Financial Conduct Authority (FCA).
If you receive an email offering such advice please check the Financial Conduct Authority’s ScamSmart website for guidance.