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  1. #1
    At age 55 I would like to take 25% tax free from my Personal Defined Contribution pension and leave 75% untouched and continue to pay 40k each year in, including employer and Gov contributions. Is this allowed? Plus could I then retire fully at 58 and put the pension pot into a dreadown scheme, obviously with no 25% tax free as this was done at age 55?

  2. #2

    25% tax free but leave 75% untouched and continue contributions?

    If you take a tax free sum, you will have to crystallise your pension. This will have several consequences which you need to research yourself ( or ask a FA).

    One of the consequences will be that you'll only be allowed to invest a maximum 10k pa in future according to current government rules which may be reduced to 4k as was announced in the last budget.

  3. #3

  4. #4
    I am in drawdown and have taken the 25% tax free cash. As far as I am aware you can invest 40k per annum (max) until you start to draw an income, when it reduces.

  5. #5
    I believe Keith Cobby is correct. As long as you just take your PCLS (the tax-free 25%) and don't draw any other income from it, the pension contribution rules stay the same as they were before the PCLS. It's only when you actually start to draw income that the contribution reduction comes into effect.

  6. #6
    You can take your max tax free cash (25%), take no taxable income from the remaining 75% and continue to contribute 40,000 each year.

    If you were to take a taxable income from the remaining 75%, you would trigger the Money Purchase Annual Allowance (MPAA) and be restricted to contributions of 10k/4k (the law is currently unclear on this).

    I'm an IFA by the way, so happy to answer straight forward questions.

  7. #7
    Catch the pigeon, is totally correct.
    That is what I am doing and works for me - not investing 40k per annum for I have retired, so my contributions are far smaller as I am in p/t work.

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