mentalist

Has anybody opted to cash in their private pension at 55 yrs of age rather than wait until retirement age? With no regular payments being made into my fund, the only downside appears to be the income tax implications. They say that the first 25% is tax free with the remainder taxable. What if you are living overseas and thus not subject to UK income tax? Would it be wiser to cash in now or wait until I return to the UK. Any thoughts from those in the know?

Meow

Don't do it. What would you live on if you fully encash a pension? Unless you have loads of other assets (assuming not from your past posts) or other income this is rarely a good option.

You cannot avoid tax as a non-resident as this would be equivalent to "income arising in the UK" and thus taxable.

Not all pension/insurance companies are even allowing this yet and many are putting up other obstacles.

It's complicated and proper (qualified) advice is required. Do you really want to pay 40% tax on 75% of your pension fund, or possibly more? Have you thought about the IHT implications or the income your wife would receive on your death?


UK Pensions Freedom – or is it? | Financial Planning in the UAE


Edited at add. By qualified advice I mean decent UK qualifications not some adviser out here who has a couple of basic exams. That is no where near enough to advise on the complicated UK pensions market.

scrubbedexpat141

I was talking to my Dad about pensions and normally he's pretty impressive at making things clear and straight forward. Not these monsters though.

mentalist

Thanks for the helpful advice, Meow. It just seemed preferable to have it in a bank account with easy access, but we can wait. However, even if we wait until my retirement date, we will still have to pay tax presumably, although at a lower rate if encashed piece by piece rather than in one lump sum I guess.