Autumn Budget - The 'Lump Sum' Pension Conundrum

For anyone over 55 with a significant pension, this 5 minute discussion between Kealan Doyle and Tim Warr of Warr & Co Chartered Accountants is a ‘must listen’ ahead of the 30th October Budget.

Chancellor Reeves is likely to have a sweeping budget on that day that punishes high net worth individuals.  Many of the pillars of personal taxation are potentially on the chopping block, including pensions, ISAs, CGT, as well as IHT relief and eligibility. However, there is also some serious discussion about either ending or limiting the ability to withdraw a 25% lump sum amount.

Enter Tim Warr.  Symvan was presenting at an EIS event for wealth managers in Manchester last week, which was followed by a discussion of the upcoming budget.  It was there that Tim opined on the need for a significant part of the wealth management industry to consider drawing down on the 25% of their pension pot ASAP.  His central insight is that if the Chancellor does act against the drawdown, investors have paid no tax rather than 40% or 45%.  And if she does not act, one can make use of a 30-day cooling-off period, and return the money to the pension provider at minimal cost.

However, as Tim notes, you really have to act now if you wish to avoid this significant risk.

Capital at Risk.