All such pension income is assessable for tax.
Whether or not you pay tax and how much depends on your personal circumstances and overall income.
All such pension income is assessable for tax.Don't forget that you pay tax on all pensions including state pension when you retire
They already have.Just a side note, do you think future governments might change the 25% TFLS?
IFS calls for government to scrap 25% tax-free lump sum
Surely this is misleading?They already have.
In a word no, the civil/public service would have to do similar, and I don't see them giving up that benefit.Just a side note, do you think future governments might change the 25% TFLS?
IFS calls for government to scrap 25% tax-free lump sum
That’s really useful info. I had thought you had to draw the income of 4% if you took the lump sum once you were over 60. By not doing so, it is not a “live ARF”, as you say.@DeepThinker, is your current pension pot all in the one - current employment pension scheme ? If you have some of the 725k pot, spread across more than 1 scheme, (or a personal retirement bond)you can hold off on, on actioning the ARF/TFLS on one or more of them.
If for example, you had 250k from a previous employment DC scheme(or a personal retirement bond), and 475 k in current employment scheme, then, you could start drawing on one of these only, on your retirement at age 60, the 4 % imputed minimum, only applies to pension pots which have been transferred into a “live” ARF”.
This gives additional flexibility, in having more control of drawdowns, and more control of delaying drawdowns, until later on, if that is required, it also adds additional growth potential, as delaying drawdowns, can mean potential additional growth in the funds.
This looks very straightforward and compelling. Assuming a 1M pot and retiring at 60, the key attraction for me is that it confines the imputed distribution to a smaller amount and also allows you access tax free lumps sums at different times.Why not move everything into a PRSA and phase retirement?
A PRSA can be split. So you can have both pre and post retirement “ pots”
Say you get the fund up to €1m
You can retire say €100k
From this pot you can take 25% lump sum
The first €200k is free of tax so this is a tax free lump sum.
You then have €75,000 in a vested or retired PRSA and €900k untouched.
You can draw income from the vested part at any rate you want (subject to minimum distributions at 61 etc)
So you might choose to take an income to make use of exemptions and reliefs. Say €25kpa
So this would last about 3 years.
You then repeat the process
Each chunk of pension has its own lump sum allowance of 25%.
The untouched pension part grows free from personal taxes and is treated as a return of fund on death whereas a spouse or civil partner will take over the vested part on death.
This is just a more flexible and tax efficient way of planning. Rarely see it discussed
Marc Westlake CFP, TEP, APFS, QFA, EFP
Chartered, Certified and European Financial Planner
Registered Trust & Estate Practitioner
Everlake
Legislative cul de sacs unfortunatelyThis looks very straightforward and compelling. Assuming a 1M pot and retiring at 60, the key attraction for me is that it confines the imputed distribution to a smaller amount and also allows you access tax free lumps sums at different times.
For example, you might want to give 75k to both daughters for house deposit. There's a few years difference between when they need the money. So you could retire 300k at different points in time.
Is it as simple as that? You just convert a buy out bond to a prsa, and that frees up this approach? Any other considerations with converting buy our bond to prsa?
That's basically what I did last year and I now have 4 PRSA contracts (all with the same provider) that can be retired at different times if necessary. As @Marc says though, you can't go from a BOB/PRB (or RAC?) to a PRSA. That's why I still also have a PRB and a RAC! But that's just more flexibility.This looks very straightforward and compelling. Assuming a 1M pot and retiring at 60, the key attraction for me is that it confines the imputed distribution to a smaller amount and also allows you access tax free lumps sums at different times.
For example, you might want to give 75k to both daughters for house deposit. There's a few years difference between when they need the money. So you could retire 300k at different points in time.
You can transfer benefits from an RAC to a PRSA alright but PRSAs are often more expensive than RACs (or PRBs for that matter).you can't go from a BOB/PRB (or RAC?) to a PRSA
Thanks for that clarification.You can transfer benefits from an RAC to a PRSA alright but PRSAs are often more expensive than RACs (or PRBs for that matter).
Ordinararily, yes.If a person has a prb valued at 450k and a prsa valued at 400k, can both of these pensions be retired and 200k TFLS taken?
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