Pension 25% Tax-free

If the trustees of a Money Purchase pension scheme want to allow members to take 25% out of their pension fund when they "are entitled to the pension" are they allowed to within the law.

NB The key point is when "entitled to" rather than "when taking " pension.

The rules of the scheme are that members can take their pension when they are 60 if they so wish - even if they are still working.

So, can the trustees permit someone to take 25% out of the fund tax-free when they reach 60 (ie they are entitled to the pension but may not actually be buying an annuity at that time - and may continue working)?

I have read/heard numerous views on this. If you believe you know the answer - please can you point at the relevant part of the Finance Act

2004 (or elsewhere) which explains this; (obviously interested in pov as well)

TAI.

Reply to
LizBarker
Loading thread data ...

Fine, my wife was 58 when she took hers. Took a bit of a penalty as prescribed in the rules BTW.

Well I did that, and I moved the funds to a drawdown provider, but AIUI I need not necessarily have taken any drawdown payments. I did, however, but can revert AIUI should I win the lottery or whatever.

Now you are taking the piss.

DG

Reply to
Derek Geldard

You can only take the 25% cash if you buy an annuity at the same time - unless you move the whole fund into a drawdown plan, taking the cash on the way. The cash canot be taken in isolation.

The problem with answering a question like 'where is the place in the Finance Act where this is written is a bit like asking 'where in the Road Traffic Act does it say that we drive on the left in the UK'. I'm sure it's there somewhere. I cannot quote the place in the Finance Act, but suggest that you ring HMRC on 0115 974 1777 and you can get answers to your questions from the horse's mouth.

Rob Graham

Reply to
Rob graham

The 25% tax free cash has been renamed "The Pension Commencement Lump Sum" and as such can only be taken when the pension commences.

Reply to
Stickems.

Yes. However, although the name has changed the rules haven't. You cannot now, and never could, take the cash in isolation.

Rob

Reply to
Rob graham

Many thanks to those who have responded.

However, I would have thought that this was a very simple question with (hopefully) a simple answer.

Whilst some people have answered the question (in their opinion - and many thanks for doing so) - no one has actually pointed me at the precise legislation.

Does this explain the uncertainty in the answers?

Can I trouble people for more detail/explanation.

Reply to
LizBarker

Like I said, why not ring HMRC on the number I gave you and ask them where to find it?

Rob

Reply to
Rob graham

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.