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Category

😹
Fun
Transcript
00:00Now, whether or not you take your pension tax-free cash should be an intentional decision.
00:05Taking it just because it's there seems pretty short-sighted to me for a few reasons.
00:10With a DB pension, reducing your guaranteed income to increase your tax-free cash
00:15puts greater strain on your investments to meet your outgoings because your income is lower.
00:19As your pension will almost certainly be index-linked as well,
00:22you're not just giving up income now, but all the future increases on the cash that you take out.
00:28With a DC pension, you're taking cash out of a tax-free environment, a pension,
00:33into a potentially taxable environment, such as a bank account.
00:37Now, you could ISA some of it, maybe even all of it.
00:40You could buy premium bonds.
00:42But even if you put it in a place which is free of income tax,
00:45you are definitely adding that tax-free cash into your taxable estate for inheritance tax.
00:50So, yeah, it's potentially a more complex decision than just taking tax-free cash out of your pension because you can.
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