How to access DC pension

[Pleasealexa]

I'm a few years away from accessing my DC pension but after a few tough weeks at work I'm day dreaming of retirement! However I don't know how people generally access a pension, assuming you reach 55 or 57.

I.e if you want to draw an income, ideally using 4% rule so capital is maintained, What's the mechanism for taking the money...do you set up an instruction to pay monthly or yearly? Can you change the amount regularly or only once a year? Is tax deducted or do you have to put aside tax to pay at end of tax year.

Would be interested to hear from those who are accessing pensions, especially non DB (as these seem much more straight forwards)

It can depend on what your pension provider facilitates. Some are very flexible, others not.

I manually withdraw from my SIPP quarterly but could set up a regular monthly withdrawal if I wanted. I think a monthly withdrawal needs to be the same very month but haven’t checked as I don’t use it.

Tax is deducted so it’s important to ensure your provider has the correct tax code for you. You can take 25% of the whole pension tax free if you like, you would need to decide if that’s what you want to do or just take 25% of each payment tax free.

It took a few days to make the first withdrawal as it was the first time I had accessed that pension, but it’s as easy as making an online bank transfer now.

You need to be aware that there are some rules around how much you are allowed to add to your pension once you have accessed it. I think MSE has a guide.

Thank you. It wasn't a consideration when I took out the pension about flexibility.

I‘m finding the Meaningful Money YouTube videos quite helpful for all sorts of pension planning questions. I don’t remember off the top of my head but how you draw down a pension can make a big difference in terms of tax efficiency. It depends on your other income what the best option would be for you.

You can get a free appointment with Pensionwise if you are over 50 https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

I thought I was pretty clued up on things but they opened my eyes to a few options and were incredibly helpful. And they won’t try to sell you something!

We are with Royal London and are choosing to withdraw ad hoc sums rather than a regular draw (because we also have annuities and a DB pension).

We chose not to take 25% TF up front, and are taking 25% of each draw tax free, paying marginal tax rate on the remainder and leaving the balance to grow with the aim of ultimately having a greater ££ tax free (if we ever draw the whole lot down). We have to call each time to make withdrawals like this, it's a 20min straightforward call.

They sent a leaflet explaining options pretty clearly.