It's not really a 'tax break' though as in theory you pay the tax when you receive your pension. If you change the rules then all you'd get is people putting the money into their ISA so probably not a massive amount of difference when played out.
Thanks yep I got that. What I mean is, for example if you took £250'000 out of your pension and put it in a current account you would be earning over £1000 per month in interest @5% which would immediately take you over the tax threshold of £1000 per year. You could put £20'000 in an ISA but you're still left with £230'000 of taxable savings aren't you? Perhaps it's flagged as pension funds somehow and is exempt?
It wasnt that long ago the government was consulting on completely flipping the tax on pensions on its head and making contributions taxable, but pension taken later as tax free.
There is a massive benefit for the government here in that it increases the tax take right now, quite noticeably.
The step after that, reintroduce some tax on pensionsIMO. It wouldn't be the full amount I would say, but some small amount.
you don't need to take the tax free cash element of your pension in one go. You could take the £250k out in chunks of £20k a year and stick it in an ISA. The remainder would remain invested and hopefully grow AIUI.
Ok tax giveaway. ISAs are great but only 20k, no employer contributions and no government top up. 20% would still be very attractive, still the best investment choice for most people.
in this day and age there won't be that many people without mulitple pensions... most people will have two, the state pension and their work pension. I'm currently have 5 and that's after moving two into a single one.
Unless I somehow get a DB pension (unlikely) I can't see any reason why I would have any more than one personal pension + the state pension (if it still exists/isn't means tested) when I retire.
Yep, every time my son gets a new job he transfers his old work pension into his SIPP. If there are no benefits involved, which would be unusual these days, then leaving them scattered over what could be a 40+ year work life is just unnecessary expense and complication.
Yep, very unlikely. I wouldn't be interested in that pay cut - it would be about 70%! I have legacy benefits in my SIPP already - it's better for me to move anything new there when I can.
Do they take tax at source then like PAYE, even if you're in a drawdown arrangement? Not looked into it but isn't a drawdown entirely flexible, I could take £10k one month and nothing for the next three etc?
In simple terms yes they do.
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