There is the possibility to retrieve your pension funds even if you’re not retiring!
It’s time to start planning your retirement! The Pension Withdrawal section is an excellent place to start. You don’t want your pension to give you sleepless nights! Discover more about drawdown and the essential tax facts, including how the pension lifetime allowance and money purchase annual allowance work.
Pension Withdrawal Basics
Simply put, here are a few basics on how to withdraw your pension.
Find out how you can access your pension and how you can withdraw.
Find out what the rules are when accessing your state, personal, and workplace pensions. There are specific rules about age and withdrawal methods that are important to note.
Just in case you are unfamiliar with lifetime allowance, find out about it. There is currently legislation on lifetime allowance, which can impact pension saving.
Learn what a deferred pension is. There are also benefits when you delay taking your workplace, personal assistance, and the State Pension.
But wait, let me tell you something. Be smart and know what income drawdown is. You can use it to access your pension from the young age of fifty-five. PensionBee can inform you about that.
It turns out it’s also a good idea to know the different rules around claiming your workplace, personal, and State Pension.
The Pension Withdrawal Rules
You might be hoping for an early pension. There will be a few things to note about that, so have a look into that as well.
Your pension provider may charge you some drawdown fees when you are trying to access your pension. They will also charge fees for administration and withdrawal.
Your pension provider may charge you tax on 75% of your savings. The tax is calculated using your yearly income and your tax rate.
Lump-sum pension withdrawals may be subject to emergency tax. How does it work? How can you reclaim your overpayments from HMRC? You need to read up about that.
Early pension release is something that you need to know about as well. Read up on the rules and consequences of withdrawing your pension money before 551.
Do you know what the money purchase annual allowance (MPAA2) is? It can impact your pension contributions, so have a look at that.
You have the choice of taking out all your pension funds at once, you can take it out as a lump sum or you can take out some every now and then. You won’t be taxed on the first 25%, only after you take out more than that will that amount be taxed.
Yes, you can take your pension funds out earlier than your planned retirement age. If you’re 55, you’re allowed access to your pension pot and you can withdraw as much as you need or want. It’s all in your control. But once again, you’ll be taxed once you take out more than 25% of your pension.
Pension Drawdown can be a good idea, depending on what you want out of your pension and what your needs are. If you withdraw only some of your pension, your savings will keep on growing, which is excellent! So, if you’re really in need of some cash, but don’t want to give up your investment, you don’t have to with pension drawdown.
If you take out funds in chunks, the first 25% won’t be taxed. However, yearly you’ll still be charged if you withdraw more than 25% of your pension, so just take note of that and incorporate that into your budget.