I can’t dip in and out of my £100,000 Pru pension without a huge tax bill

Money Mail’s letters page tackles all your financial headaches

I’M 56 and would like to draw down my pension in segments. Prudential, where I hold the bulk of my private savings, says this is not possible and I must take it all in one go or leave it in.

This has thrown up several tax questions. Despite building up my pension pot over many years, the whole of it will be taxed in one year.

I believe that the first 25pc is tax free, but I could be taxed at 45pc on the rest once my personal allowance has been used up. My pension pot is around £100,000. I have no earnings and live off my savings.

Ms B. P., Devon.

Stop! You could be about to make a catastrophic mistake which could lumber you with a huge tax bill — and throw your retirement plans into disarray.

You say your pension is £100,000 and you have other savings, but this has to last you for the rest of your life — and as a 56-year-old woman this could easily be 35 years or more.

With a £100,000 pension, you can usually take £25,000 tax-free. But the tax bill on the remaining £75,000 will be at least £17,500 if you take it all at once. I say ‘at least’, as this is the figure if you have no other taxable income. Unless all of your other savings are in Isas, then some interest from these will also be taxable.

If the interest from your savings is using up all your personal allowances, your pension tax bill might be £22,500. the tax-free interest you get from your taxable savings could also be affected.

Basic-rate taxpayers can receive £1,000 interest a year from non-Isa accounts, but higher-rate taxpayers get only a £500 allowance. taking that pension all at once would make you higher-rate.

prudential says you have two plans. Neither allows occasional withdrawals, known as uncrystallised funds pension lump sums. But there is nothing to stop you moving your pension to another provider, which would let you take this route and mitigate your tax bill.

Neither of your pensions has any form of annuity guarantee, which might have provided an enhanced income for life. prudential and I strongly recommend you take independent financial advice from a pension specialist, as you are dealing with complex tax and financial planning affairs.

Advice will cost you money, but it will be a lot less than the tax bill you can avoid. You should also be able to get advice on managing your savings throughout your retirement. the Money Advice Service (0800 138 7777 or money

adviceservice.org.uk) has a guide on finding a retirement adviser.

MY WIFE was admitted to hospital in Dublin for surgery. I had to pay €12,170, and used my Nationwide Visa debit card.

As I live in Northern Ireland, I knew there would be a charge for the non-sterling transaction but assumed it would be capped at the usual Nationwide level of £50 per transaction. Imagine my shock when I saw the transaction fee was actually £295.91!

Nationwide said that while it has a cap on all single transaction fees of £50, this does not apply to the Visa Debit card. I was not aware of this.

I. B., Co. Down.

I FEAR you have got muddled. the foreign currency fee for using a Nationwide debit card is 2.75pc with no cap. I looked at Nationwide’s website and this is clearly set out. I can’t see any reference to a £50 cap.

As you spent €12,170, the transaction fee would be £295.91; an eye-watering sum, but a fairly standard fee for using debit cards when paying in foreign currency.

You can avoid this by using certain Visa credit cards, including Nationwide’s Select Credit Card — though the option of paying by credit card may not have been available to you.

Nationwide says it is sorry to hear of your concerns but believes its charges are clear. It has offered £50 compensation as you were initially incorrectly told to address your concerns to Visa.

MY BOYFRIEND and I rented a 4m x 4m bedsit in August 20, 2018. It has underfloor heating which didn’t work until late November. We hardly used it. We couldn’t read the meter as it was locked away. We finally got a bill of more than £500.

We disputed it and were told it was wrong. Now it is more than £700. We wrote to British Gas to ask it to check the meter is the firm’s, as it only has the flat number written in pencil on it.

H. G., by email.

BRITISH gas phoned you several times after I made contact, but you didn’t answer. It also emailed and got no response. If you can’t be bothered to help yourselves, it is very difficult for British gas or me to help you.

Your usage is in line with what British gas would expect. You owe £748 covering a nine-month period — and have yet to pay anything. Underfloor electric heating is expensive.

If you cannot gain access to your meter or are concerned it is being misrepresented, perhaps your dispute should be with your landlord. or try phoning British gas. It has been on the alert for your call.