Risks Of Taking A Capped Drawdown Pension.

[Davypops]

I'm thinking of taking the 25% tax free sum on my private pension and leaving the rest in Drawdown (but not taking anything out yet). The legal blurb goes on about you could lose a lot of your pot if investments go down. Is this just a formal warning, when in all probability - nothing will happen? Has it ever happened? Maybe in the the 30's it did.

[Hymie]

Wait a year, and under the rules announced in the recent budget, you will be able to access the whole amount – rather than mess around with drawdown.

But you can only get 25% of it tax free, so to minimise the tax paid, you will need to take the remaining 75% of the money in annual amounts such you don’t become a higher rate tax payer on the money withdrawn.

Even so, you will pay 20% if you are a basic rate tax payer.

[Peter Pedant]

yeah I agree Hymie

The govt agrees the draw down deals are really cr+p
and the new rules will be better for the likes of you.

I have to say I am waiting myself.

[Davypops]

Thanks to both of you, cheers. Am I right in thinking, though, that if I took 25% now (I need the money!) and didn't take any drawdown at all, then next April I would still be able to take it as I wish - taking under £10,500 pa. to avoid tax. NB. I am unemployed so I don't even reach the tax threshold. Thank you for your input. David.

[Hymie]

I don’t think you can do that – there is some talk of those who took the 25% just before the budget announcement being able to ‘undo’ what they have done, so that they can access the remaining 75% rather than being tied to the annuity (or whatever). Equally, some experts believe that the rules do not allow it to be undone.

Remember that once you take a pension, you are ineligible to receive job seekers allowance – so for this reason it may be best to delay taking the pension money.

Being able to access your total pension pot is not something you should give up easily – doing so will cost you many thousands of £s.

I suggest you seek advice from a financial adviser – it could be money well spent.

[Davypops]

Yes, thanks for that, will get advice then...

[Canary42]

2008 hit the Market badly too.