Andrew Tully, technical director at Canada Life comments on the revised OBR estimates on pension dipping:
“The OBR is basically setting expectations for a ‘new normal’ of pension dipping activity as tax receipts are predicted to hit £1.7bn. An increase of £0.4bn on 2021. This is not a temporary spike and sets the expectation that the cost of living crisis will be with us for years to come as people look to their pensions as a bank account to support their day-to-day living costs. This is understandable behaviour as people look to make ends meet but we need to remember that pensions are already likely to be stretched over a longer lifespan than previous generations and any withdrawals will need to be sustainable over this period.
“Savers who choose to access their pension pots should also be aware of the MPAA sting in the tail, which significantly limits how much you can continue to contribute to your pension should you wish to top-up any withdrawals.”
Canada Life's pension tax calculator to find out the amount and percentage rate of income tax you’ll pay on the pension funds you withdraw. https://www.canadalife.co.uk/customer-tools/pension-tax-calculator/
OBR paper:
https://obr.uk/docs/dlm_uploads/CCS0222366764-001_OBR-EFO-March-2022_Web-Accessible-2.pdf