Retirement 31/7/14 age 55-Options?

philng

Wife intending retiring 31st July and has a DC scheme with work approx value £50k.
No intention of taking account annuity due to poor value and have significant other investments (circa £600k+).
Attracted by changes announced in budget which take effect April 2015 allowing access subject to marginal rate tax deduction.
What are best interim options? Temporary drawdown set up?

zagfles

Could do. A lot of providers currently offer drawdown at low charges, but their charges are likely to be reviewed with the new rules coming in. If she has £12k of secure income she could draw down the whole lot before April 2015, though this might not be a good idea as it'll put her well into 40% tax.

kidmugsy

philng wrote: »

Wife intending retiring 31st July and has a DC scheme with work approx value £50k.
No intention of taking account annuity due to poor value and have significant other investments (circa £600k+).
Attracted by changes announced in budget which take effect April 2015 allowing access subject to marginal rate tax deduction.
What are best interim options? Temporary drawdown set up?

What's her tax position? The option to choose probably depends on this.

gadgetmind

Take 25% PCLS this year, put the rest into drawdown and take what you can tax free, so £10k assuming no other income. Maybe even then lob whatever she can (£2880+) back into a pension.

After April 2015, assuming the Freedom and Choice legislation doesn't get knobbled by the financial services industry, start drawing her personal allowance every year for four years or so.

Triumph13

With those other investments she doesn't need the pension money immediately so if you think the new rules will make it to law consider contributing 100% of current salary before the end of this tax year (if enough annual allowance left / b/fwd) plus all of next year's before retirement.

atush

I'd have her whack more into pensions as she iov overweight in unwrapped.


Add in this year's allowance plus any from years past allowed. Add in full contribs til retirement.

philng

So drawdown is the best route?

She is basic rate taxpayer earnings approx £30k per year plus investment income/interest of say £5k outside ISA's.

Which are the cheapest drawdown providers?

gadgetmind

philng wrote: »

Which are the cheapest drawdown providers?

As this is a short term thing, you can ignore fund fees for the most part so just need to understand set-up, annual and exit fees.

Sadly, I don't actually know the answer to this question!

atush

gadgetmind wrote: »

Take 25% PCLS this year, put the rest into drawdown and take what you can tax free, so £10k assuming no other income. Maybe even then lob whatever she can (£2880+) back into a pension.

After April 2015, assuming the Freedom and Choice legislation doesn't get knobbled by the financial services industry, start drawing her personal allowance every year for four years or so.

I agree, apart from I think she is working post april this year, so I would wait til april 2015 before taking any income above the TFLS (or if her income is less than 10.5K, draw up to this amt).

Then after that draw up to the PA and hey presto, no tax (assuming she has no other income incl savings income unwrapped?)

Triumph13

The key thing is that if she has no other taxable income until state pension comes in you have the opportunity to take the pot, plus any extra contributions she can make, tax free.

If she contributes the whole of her £10k income in the tax year 2014/5 she will get £2,500 of tax relief on it. She can then take the TFLS immediately and draw down max allowed in that tax year under capped rules and the full PA in each subsequent year

kidmugsy

I dunno who's cheapest, but Hargreaves Lansdown seem to be decent value for a SIPP of modest size, and their service impresses me.

You could visit the website of Langcat for guidance.