take and then reinvesting tax free pension lump sum

[ds666]

If your pension tax free amount is at the max (c£268k), does it make sense to take it out and reinvest over several years into ISA's ( start in GIA , take £40k out every year into ISA) , thereby growing the effective tax free element of your pension?

TIA

[Clad-Hach]

I am due to get my TFLS in December, I was in with my IFA this morning to discuss what to do with it...and she suggested a GIA.

So that's what I am going with as its slightly more tax efficient, CGT 18% vs income tax 20%.

[FarmyardPants]

If you are just over the old LTA and so your TFC is maxed, there is an argument for doing this, for the simple reason that if the market goes south and your pension drops significantly, your TF portion will also drop, and it might be several years before it recovers back up to the max (or may never do, or the allowance might be decreased in the meantime).

There is little chance the £268k will increase after all.

You can use this lump to supplement your annual income over the years just as you would have done by crystallising in stages.