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    • Chickabee
    • By Chickabee 4th Dec 17, 3:29 PM
    • 199Posts
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    Chickabee
    Pension Advice for father who has taken stroke
    • #1
    • 4th Dec 17, 3:29 PM
    Pension Advice for father who has taken stroke 4th Dec 17 at 3:29 PM
    My 68 yr old father recently took a stroke and as a result I have been helping him with all his financial affairs.
    He has a defined contribution pension with Phoenix ( formerly Scottish Mutual) that he has done nothing with. He was sent a retirement pack in 2016 and unfortunately has never been a man to keep on top of his paperwork so it has sat untouched.
    Due to his recent stroke he is obviously concerned about getting his pension sorted. He would like to get it all out if possible but I'm aware he can only access 25% tax free.
    I rang Pension Wise to try and get some information on his behalf and they advised I could set up a phone appointment in about 8 weeks.
    Would anyone be able to give me some general advice in relation for the best way to access the funds in the most tax efficient way. He would prefer to access as much as he can rather than receive a monthly or annual pension.
    Any advice at all would be greatly appreciated.
    thanks
Page 1
    • dunstonh
    • By dunstonh 4th Dec 17, 3:39 PM
    • 89,840 Posts
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    dunstonh
    • #2
    • 4th Dec 17, 3:39 PM
    • #2
    • 4th Dec 17, 3:39 PM
    He would like to get it all out if possible
    Why?
    Does he intend to spend it in one go?

    Would anyone be able to give me some general advice in relation for the best way to access the funds in the most tax efficient way.
    Any local IFA.

    He would prefer to access as much as he can rather than receive a monthly or annual pension.
    More info on that will be needed as it is probably likely that its a bad idea and he is not aware of the options and is just saying that. Start with what he needs. Not what he wants. i.e. if all he is going to do is put it in the bank account then clearly it is a very bad idea. However, if he has spending plans over the next "x" years then he could draw it over multiple tax years. If he doesnt need it at all, then just leave it in a pension.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • kidmugsy
    • By kidmugsy 4th Dec 17, 3:51 PM
    • 9,893 Posts
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    kidmugsy
    • #3
    • 4th Dec 17, 3:51 PM
    • #3
    • 4th Dec 17, 3:51 PM
    Make sure he's completed the form that specifies whom he wants the pension to pass to after his death. (You could explain to him that the money doesn't just evaporate on his death.)
    Free the dunston one next time too.
    • Chickabee
    • By Chickabee 4th Dec 17, 3:54 PM
    • 199 Posts
    • 71 Thanks
    Chickabee
    • #4
    • 4th Dec 17, 3:54 PM
    • #4
    • 4th Dec 17, 3:54 PM
    He doesn't need the money right now hence the reason he has left it sitting there untouched. However I think from his point of view due to his recent stroke it is playing on his mind that he has a lump sum sitting there and he seems to have a fear that if he died he would lose it.
    If he did take it out it would literally be sitting in his bank account.
    He has a fear he is going to take another stroke.
    From a pension point of view he has been told if he took it all out in one lump sum he could pay tax of 40% on the remaining 75%. If he was to take it in smaller chunks over a period of time would it be more tax efficient?
    • dunstonh
    • By dunstonh 4th Dec 17, 4:01 PM
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    dunstonh
    • #5
    • 4th Dec 17, 4:01 PM
    • #5
    • 4th Dec 17, 4:01 PM
    However I think from his point of view due to his recent stroke it is playing on his mind that he has a lump sum sitting there and he seems to have a fear that if he died he would lose it.
    So, its an incorrect assumption that is driving this then.

    In the event of death before age 75, the full value of the pension is paid out tax free. So, drawing it early and paying tax on it is pointless if that is the objective.

    From a pension point of view he has been told if he took it all out in one lump sum he could pay tax of 40% on the remaining 75%. If he was to take it in smaller chunks over a period of time would it be more tax efficient?
    Not taking it out at all is the most efficient option.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Chickabee
    • By Chickabee 4th Dec 17, 5:43 PM
    • 199 Posts
    • 71 Thanks
    Chickabee
    • #6
    • 4th Dec 17, 5:43 PM
    • #6
    • 4th Dec 17, 5:43 PM
    Thanks for the advice. I've asked the pension company to send me out information on their in death policy. So once I get that I will go through that with him
    • sheramber
    • By sheramber 4th Dec 17, 7:35 PM
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    sheramber
    • #7
    • 4th Dec 17, 7:35 PM
    • #7
    • 4th Dec 17, 7:35 PM
    Have you got a Power of Attorney for your father?

    You don't need to use it now but it would prevent problems if your father became unable to conduct his own affairs in the future.
    • Dazed and confused
    • By Dazed and confused 4th Dec 17, 9:18 PM
    • 1,936 Posts
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    Dazed and confused
    • #8
    • 4th Dec 17, 9:18 PM
    • #8
    • 4th Dec 17, 9:18 PM
    If he either took it all in one go or in part as a large (taxable) amount the pension company might have to deduct some 40% tax at the time they make the payment but if necessary this would be repaid by HMRC.

    Until you know his total taxable income for the year, including the taxable pension amount, it's impossible to know what the correct amount of tax would be.

    If you read enough threads on here you will find some are able, due to their own circumstances, to take £11,500 and pay no tax whereas others could, in extreme cases, have to pay £6,900 tax on the same £11,500 payment.
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