Implications of taking my tax free lump sum
Discussion
I'm considering taking my TFLS this year but wondered what the long term implications are?
I think I'm correct in saying that the remainder (75%) is considered crystallised? and that not all pension providers will accept transfers of crystallised pensions?
Are there any other things I should be considering?
Thanks
Mac
I think I'm correct in saying that the remainder (75%) is considered crystallised? and that not all pension providers will accept transfers of crystallised pensions?
Are there any other things I should be considering?
Thanks
Mac
tight fart said:
Yes lots, how big a pot are you talking about, are you moving the pension into a sipp, have you maxed out your isa allowance, and lots more..
Take advice, your likely to get some good advice on here, but you need to get professional advice as well.
Totally agree. Some people avoid IFAs on here due to ongoing trail fees but the above is a great example of why paying for advice is important.Take advice, your likely to get some good advice on here, but you need to get professional advice as well.
mondeoman said:
No more pension contributions allowed (if you're still working that is)
Get advice!!
Not true. Accessing tax free lump sum does not restrict future pension contributions, although you may not be able to recycle the withdrawal by increasing your rate of contributions. Mpaa is triggered only when you touch the taxable part.Get advice!!
FriedMarsBar said:
My pension provider says that's not the case, using taking your TFLS doesn't trigger MPAA and they've put it in writing.
They are correct, it definitely doesn't.Take even 1p of the crystallised amount and it does.
On the original question - the obvious thing to ask is why you're taking it. As long as you have a purpose for it, then fine, but don't take it just because you can. With some providers you can just take part of it, if that's all you need & leave the rest uncrystallised.
Car bon said:
FriedMarsBar said:
My pension provider says that's not the case, using taking your TFLS doesn't trigger MPAA and they've put it in writing.
They are correct, it definitely doesn't.Take even 1p of the crystallised amount and it does.
On the original question - the obvious thing to ask is why you're taking it. As long as you have a purpose for it, then fine, but don't take it just because you can. With some providers you can just take part of it, if that's all you need & leave the rest uncrystallised.
I'd heard differently, and the rules need to be understood:
Someone on Google says
"The main situations when you’ll trigger the MPAA are:
if you take your entire pension pot as a lump sum or start to take lump sums from your pension pot (although see special rules at the bottom of this section for small pots)
if you move your pension pot money into flexi-access drawdown and start to take an income
if you buy an investment-linked or flexible annuity where your income could go down
if you have a pre-April 2015 capped drawdown plan and start to take payments that exceed the cap.
The MPAA won’t normally be triggered if:
You take a tax-free cash lump sum and buy a lifetime annuity that provides a guaranteed income for life that either stays level or increases.
You take a tax-free cash lump sum and put your pension pot into flexi-access drawdown but don’t take any income from it. "
mondeoman said:
Car bon said:
FriedMarsBar said:
My pension provider says that's not the case, using taking your TFLS doesn't trigger MPAA and they've put it in writing.
They are correct, it definitely doesn't.Take even 1p of the crystallised amount and it does.
On the original question - the obvious thing to ask is why you're taking it. As long as you have a purpose for it, then fine, but don't take it just because you can. With some providers you can just take part of it, if that's all you need & leave the rest uncrystallised.
I'd heard differently, and the rules need to be understood:
Someone on Google says
"The main situations when you’ll trigger the MPAA are:
if you take your entire pension pot as a lump sum or start to take lump sums from your pension pot (although see special rules at the bottom of this section for small pots)
if you move your pension pot money into flexi-access drawdown and start to take an income
if you buy an investment-linked or flexible annuity where your income could go down
if you have a pre-April 2015 capped drawdown plan and start to take payments that exceed the cap.
The MPAA won’t normally be triggered if:
You take a tax-free cash lump sum and buy a lifetime annuity that provides a guaranteed income for life that either stays level or increases.
You take a tax-free cash lump sum and put your pension pot into flexi-access drawdown but don’t take any income from it. "
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