benefits at 55 under sip or stakeholder ,if keep working to 65?

bubblybabe

I know i am very naieve -is this possible -I have a final salary pension and AVC at the moment

just wondered if I open a stakeholder for example could I draw on this at 55 before I retired ??


thankyou so much if any one knows the answer to this :A

jem16

bubblybabe wrote: »

just wondered if I open a stakeholder for example could I draw on this at 55 before I retired ??

Under current rules, yes you can.

bubblybabe

I appreciate your kindness
thank you !

bubblybabe

hi :A


a supplementary query



is it better to take out a separate stakeholder or add to existing AVC?

WOULD LIKE TO HAVE FLEXIBILITY OF BEING ABLE TO TAKE STAKEHOLDER AT 55 ...........................................................

AVC is thro employer so dont know whether could deal with seperately from final salary scheme
basically would look to put an immediate £50 k in a stakeholder


if any one knows the answer I would be so grateful

dunstonh

Most AVCs are tied to the scheme retirement age. If early retirement is an objective, then (generically) using AVCs are not the best way to achieve this.

FSAVCs no longer exist and have been replaced with personal pensions and stakeholders. S&S ISAs also can be a valid option to consider as well.

bubblybabe

many thanks for your excellent reply

that is really helpful

I assume it means a stakeholder is a better option

If I took a lump sum from it at 55 ,would I have to draw an annuity from it at 55 as well ?:)

jem16

bubblybabe wrote: »

I assume it means a stakeholder is a better option

Better than the AVC for flexilbility if you want to retire early. However there are some schemes such as the LGPS which allows you to take the 25% lump sum from the whole AVC pot - this can be good but is still stuck to the scheme retirement age.

If I took a lump sum from it at 55 ,would I have to draw an annuity from it at 55 as well ?:)

You would have to take either an annuity or use income drawdown.

bubblybabe

Thank you SO MUCH to the kind posters who clearly have a fantastic knowledge of pensions! This is the best information I have ever had !:)

One thing that I was wondering was what are the rules on how long could I take either an annuity or use income drawdown over

eg could I chose to take it over 5 or 10 years provided I still have my final salary scheme ?

sorry for the dumb question but I cant work out what the rules are !

jem16

bubblybabe wrote: »

One thing that I was wondering was what are the rules on how long could I take either an annuity or use income drawdown over

eg could I chose to take it over 5 or 10 years provided I still have my final salary scheme ?

Neither will have any tie-in to your final salary scheme.

An annuity is purchased for the rest of your life. I'm not sure of how exactly income drawdown works but I'm sure Dunstonh will fill you in on that.

Have you considered your tax situation in retirement? Paying into another pension might see you pay more tax if you go over the age allowance for the higher personal tax allowance. In a situation like this you might be better off using a S&S ISA and not a pension. Of course if you are currently a higher rate taxpayer it may be better in a pension.

Also with a S&S ISA you could decide to build that up and then simply use the capital for 5/10 years until your final salary pension and state pension kicks in.

There are quite a few things you need to consider before jumping straight in with another pension.

vbm

you can use income drawdown from 55 onwards. Up until recently you had to buy an annuity at age 75 or more to a more restrictive form of drawdown called Alternatively Secured Pension.

Thankfully this is no longer the case although the final rules have not yet been agreed.

Income drawdown just allows you to take some income directly from the fund or allows you to take no income at all if you just want your tax free cash.