Your money questions: Can I combine my private pension and an investment into a new plan to lower tax?

"Q: I am retired and on the state pension. I also have €17,000 in a private pension. I know only 25pc is tax free when I draw it down. I will be on the lower income tax rate this year. I also have an investment which is worth up to €26,000 now, as I invested €20,000 over five years ago."

"What tax will I have to pay on the €6,000 growth in the investment account? Could I put all, or most of this money, including both the €17,000 in my private pension and the €26,000 in my investment, into one new plan and draw it down over 10 to 12 years tax efficiently in order to supplement my state pension?"

The €6,000 growth in the investment is normally a chargeable gain and is subject to capital gains tax (CGT) after applying the annual CGT exemption (approximately €1,270). The remainder of the gain is taxed at the prevailing CGT rate (33%), producing an illustrative CGT bill of roughly €1,560 on the example numbers. Private pension funds typically allow a 25% tax-free lump sum, with the remaining balance taxed as income when taken. Transferring non-pension savings into a pension requires making formal pension contributions and is constrained by contribution rules and relief limits, especially for retirees with no relevant earnings. Moving the pension into an Approved Retirement Fund (ARF) or buying an annuity can enable staged drawdown, which may spread tax liability over 10–12 years, but exact options depend on scheme rules and personal circumstances. Seek tailored professional and Revenue guidance before making changes.

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