[Finance] Private pension withdrawal

[moggy]

Has anyone cashed in a private pension?
I know the first 25% is tax free then the rest will be subject to emergency tax.
Can I just give my P60 or tax code letter from HMRC to the pension company so I get taxed at the correct rate or do I have to pay emergency tax then apply for a refund directly to HMRC?

 

[nicko31]

Has anyone cashed in a private pension?
I know the first 25% is tax free then the rest will be subject to emergency tax.
Can I just give my P60 or tax code letter from HMRC to the pension company so I get taxed at the correct rate or do I have to pay emergency tax then apply for a refund directly to HMRC?

I would talk to "Money Helper", (government free advice) they are very helpful on this kind of stuff

 

[AmexRuislip]

Has anyone cashed in a private pension?
I know the first 25% is tax free then the rest will be subject to emergency tax.
Can I just give my P60 or tax code letter from HMRC to the pension company so I get taxed at the correct rate or do I have to pay emergency tax then apply for a refund directly to HMRC?

I recently cashed in my Virgin stakeholder pension, only worth £3500, as only paid in for 3 years, as took it on between jobs.
They did all the work, gave me a cheque minus the tax, and they informed HRMC.
If you do this, thay may ask if you've had financial advice.
All I said, was that I had spoken to Pensionwise.
Job done

https://www.moneyhelper.org.uk/en/p...k_X1XgTPhGWk2w8V6iOMnn8XOwj2NvBoCmSMQAvD_BwE#

 

[Lethargic]

I recently cashed in my Virgin stakeholder pension, only worth £3500, as only paid in for 3 years, as took it on between jobs.
They did all the work, gave ma a cheque minus the tax, and they informed HRMC.
If you do this, they may ask if you've had financial advice.
All I said, was that I had spoken to Pensionwise.
Job done

https://www.moneyhelper.org.uk/en/p...k_X1XgTPhGWk2w8V6iOMnn8XOwj2NvBoCmSMQAvD_BwE#

Same for me with Aviva, they did all the work very simple, I did include it on my Self assessment but nothing more I had to do.

 

[Eric the meek]

Has anyone cashed in a private pension?
I know the first 25% is tax free then the rest will be subject to emergency tax.
Can I just give my P60 or tax code letter from HMRC to the pension company so I get taxed at the correct rate or do I have to pay emergency tax then apply for a refund directly to HMRC?

Yes, I've cashed in a private pension, but it was before retirement, so I took out the 25% and put the rest into a SIPP.

To answer your second question, please be careful. I would advise you to contact HMRC directly, or if you really can't face the wait on the phone, then contact your pension company.
My understanding is that if you take a payment of all the remaining 75% of your pension fund in one tranche, then HMRC will tax it as though your annual pension is 12 times that 75%. Crazy? Yes. But I believe that is how it works, or at least it did when I took mine out.

Do you really need to take the remaining 75%?

 

[AmexRuislip]

Same for me with Aviva, they did all the work very simple, I did include it on my Self assessment but nothing more I had to do.

5 min job

 

[Deleted member 2719]

Good thread.

What age do people feel they should cash in these pensions?

Will they get chance to recover

Who is NSC expert on this?

I am not talking a saleperson!

 

[Springal]

Today is probably not a good day to be cashing out pensions!

 

[Neville's Breakfast]

Has anyone cashed in a private pension?
I know the first 25% is tax free then the rest will be subject to emergency tax.
Can I just give my P60 or tax code letter from HMRC to the pension company so I get taxed at the correct rate or do I have to pay emergency tax then apply for a refund directly to HMRC?

I believe the tax refund is automatic. You will receive it in October 2022 for withdrawals made in tax year 2021/22. Make sure your bank details are up to date in your Government Gateway account. Emergency tax code and later refund is just the way they do it. There is nothing you can do to change that.

 

[AmexRuislip]

Good thread.

What age do people feel they should cash in these pensions?

Will they get chance to recover

Who is NSC expert on this?

I am not talking a saleperson!

It all depends on how big your pension pot is and whether you urgently need to cash in.
I only did mine as amount was small, now stashed away in Ernie bonds.
If you pay for financial advice, IMO you're just paying someone to tell you what you've already decided to do, waste of money.

 

[moggy]

Yes, I've cashed in a private pension, but it was before retirement, so I took out the 25% and put the rest into a SIPP.

To answer your second question, please be careful. I would advise you to contact HMRC directly, or if you really can't face the wait on the phone, then contact your pension company.
My understanding is that if you take a payment of all the remaining 75% of your pension fund in one tranche, then HMRC will tax it as though your annual pension is 12 times that 75%. Crazy? Yes. But I believe that is how it works, or at least it did when I took mine out.

Do you really need to take the remaining 75%?

Yes as planning to move abroad

 

[jakarta]

Completely academic seeing as WW3 is starting shortly...

 

[Shropshire Seagull]

Key to this decision is:
a) what is the current Transfer Value of the fund - bear in mind that yesterday's value will be significantly higher than today - thanks to Mr Putin, it will recover in time.
b) how old are you?
c) do you have other pension provision [apart from the state pension]?
d) do you complete an annual self assessment with HMRC?

Taking all a pension as a cash lump sum in one go could be VERY tax inefficient - yes the first 25% is tax free [if you're already over 55] but all of the remainder will be added to your current year annual income and taxed at your marginal rate

A transfer to another pension fund. e.g. a SIPP might be more suitable - but if you need the cash you're gonna take a tax hit to do so.

 

[portslade seagull]

Taken early retirement and took my 25% tax free but left the rest in the pot as would've taken a 200k hit if moved elsewhere

 

[Deleted member 2719]

It all depends on how big your pension pot is and whether you urgently need to cash in.
I only did mine as amount was small, now stashed away in Ernie bonds.
If you pay for financial advice, IMO you're just paying someone to tell you what you've already decided to do, waste of money.

I am in no hurry at all to cash it in, but I am assuming Putin going to f##k everyone over for year's in more ways than one.
I can take my pension fully in 9 years, will today's prices have fully recovered? and made enough extra to be worth leaving it in there?

Key to this decision is:
a) what is the current Transfer Value of the fund - bear in mind that yesterday's value will be significantly higher than today - thanks to Mr Putin, it will recover in time.
b) how old are you?
c) do you have other pension provision [apart from the state pension]?
d) do you complete an annual self assessment with HMRC?

Taking all a pension as a cash lump sum in one go could be VERY tax inefficient - yes the first 25% is tax free [if you're already over 55] but all of the remainder will be added to your current year annual income and taxed at your marginal rate

A transfer to another pension fund. e.g. a SIPP might be more suitable - but if you need the cash you're gonna take a tax hit to do so.

I have no hurry, i just like to plan ahead, if at all possible!
A)How long is time...?
B)58
C)Yes Private,
D)Yes

 

[Mancgull]

If you take a pension pot as a single lump sum then the pension provider will tax the first payment via an emergency tax code and this is very likely to be higher than the actual tax that you should pay and so you will have to reclaim it.

What you also need to consider is that you will invoke the Money Purchase Annual allowance which restricts your future pension contributions to just £4K per annum rather than £40,000.

One exception is if the pension pot is less than £10,000 and you ask for the payment to be made as a ‘small pot’. ( technical term)
Then if the pension provider is willing to do this, and you are only allowed to access three small pots, then the income part of the pension will be taxed at a flat 20% initially and you can then reclaim the balance if you are a nil rate tax payer or pay the extra tax if you are a higher rate tax payer. A small pot does not invoke the Money Purchase Annual Allowance and does not count against your lifetime Allowance.

My advice would be to take individual advice as it can save you money in the long run. Mistakes in accessing pensions are difficult or impossible to rectify.

 

[Mackenzie]

Good thread.

What age do people feel they should cash in these pensions?

Will they get chance to recover

Who is NSC expert on this?

I am not talking a saleperson!

Calling [MENTION=38333]Swansman[/MENTION]

 

[Swansman]

Calling [MENTION=38333]Swansman[/MENTION]

Thank you, thank you. I am here now, ready to save the day.

Good thread.

What age do people feel they should cash in these pensions?

Will they get chance to recover

Who is NSC expert on this?

I am not talking a saleperson!

I read in some study that in the wild, children would probably leave their parents at the age of 8 or so and in our "natural" state most of us would only become 40-50 years old. As I see it, none of us should have to work more than half our lives. Since we really can not - without the luxuary of modern society, which can not be taken for granted - expect to live past 45. This means we should only work for 22.5 years.

Starting at the age of 8 and then doing it for 22.5 years would make us retire at the age of 30.5. Time to cash in.

Recover from what? Never mind, I'll just assume things: yes. Yes they will get chance to recover. See the positives, comrade. See the half-full glass. They will recover the shit out of whatever it is.

 

[Neville's Breakfast]

Thank you, thank you. I am here now, ready to save the day.



I read in some study that in the wild, children would probably leave their parents at the age of 8 or so and in our "natural" state most of us would only become 40-50 years old. As I see it, none of us should have to work more than half our lives. Since we really can not - without the luxuary of modern society, which can not be taken for granted - expect to live past 45. This means we should only work for 22.5 years.

Starting at the age of 8 and then doing it for 22.5 years would make us retire at the age of 30.5. Time to cash in.

Recover from what? Never mind, I'll just assume things: yes. Yes they will get chance to recover. See the positives, comrade. See the half-full glass. They will recover the shit out of whatever it is.

Can’t put a price on that kind of financial advice. Thank you.

 

[dazzer6666]

I believe the tax refund is automatic. You will receive it in October 2022 for withdrawals made in tax year 2021/22. Make sure your bank details are up to date in your Government Gateway account. Emergency tax code and later refund is just the way they do it. There is nothing you can do to change that.

You can apply online for an immediate refund….don’t have to wait. Mine took no more than a few days.

https://www.gov.uk/government/publi...im-when-small-pension-taken-as-a-lump-sum-p53