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I have a (very small) second pension accumulated in Nest for the past couple of years of part time work. I'm now old enough to be able to access it. I understand that I can take 25% out tax-free. The question is; what if I start working again? The remaining pot would then increase so where would that leave me with any future tax-free withdrawal - or am I simply not allowed to make one?
TIA
You can get in touch with 'pension wise' a very good government advisory body/service.
Go to the experts instead of relying on STW?
Reported for trolling.
If you take 25% tax free, then the remaining 75% is taxed on withdrawal including growth. It also counts to the lifetime allowance if that may be an issue (which is one way to manage the allownace). Effectively, you ringfence that pot.
Provided you only take the 25% PCLS and don't touch the rest, your annual allowance doesn't change so you can continue to make normal contributions.
If you don't know what you are doing, talk to an expert.
My SIPP provider has ring fenced the pot from which the 25% TFLS was taken. I won't be able to take a further TFLS from any growth of this pot.
Any new contributions are put in a new separate 'pot', from where I will be able to take a TFLS in the future. This will then be ring fenced.
Also worth remembering is that if you take an income over and above the TFLS from your pension you are limited what you an pay into any future pensions. I think it is capped at £4k/yr.
Worth checking - I don't think future contributions are subject to this lower cap if only TFLS is taken.
It's complicated. Make an appointment with pensionwise to talk it through.
My SIPP provider has ring fenced the pot from which the 25% TFLS was taken. I won’t be able to take a further TFLS from any growth of this pot.
Any new contributions are put in a new separate ‘pot’, from where I will be able to take a TFLS in the future. This will then be ring fenced
This seems the logical approach and one I'd thought of. It's a very small amount. I'm not paying someone for advice 😅
Pensionwise is a free service. Having recently gone through retirement and speaking to them about pensions it seems there are quite a lot of things you can't do, including what you can and can't do with future earnings with respect to your pension pot. I would advise you speak to them.
Can you investigate lumping into another (SIPP) pension pot? Depends on fees of course.