Early Retirement: strategy

kidmugsy

rpc wrote: »

This is one part of the reforms I quite strongly disagree with, but ironically it seems likely that I will end up benefiting from it.

By reducing the incentive to hurry up and empty the pension pot, this might result in people keeping more funds available to pay for the woes of later old age.

rpc

Linton wrote: »

I agree that creating a tax dodge for the wealthy should not be part of the government's pension policy but it isnt that much of an IHT dodge. There is a less than 20% chance that if you live to retirement at say 65 you will die before you are 75.The great majority of people who have taken drawdown pensions will die at an age when there will be a 45% tax on a beneficiary's lump sum.

If the beneficiary leaves the pension in a pension, rather than drawing a lump sum, there will be no tax to pay until that pension is drawn down. Previously, there would have been a "death tax" on transfer of a crystallised pension with a few exceptions.

Beyond those exceptions, I'd prefer that the money lost its wrapped status (as ISAs do) and went into the estate (as ISAs do). But that won't win the grey vote.

kidmugsy wrote: »

By reducing the incentive to hurry up and empty the pension pot, this might result in people keeping more funds available to pay for the woes of later old age.

I think all of the pre-75 post-75 differences are nonsense. One set of rules should kick in when you become eligible to take your pension and another set when you die. What is special about age 75? Half way through a cohort average retirement? Keep it simple, stupid.

soperman

Remember ''Pension Simplification'' ?

View_From_the_Fen

Thanks every one for your very helpful advise. I will now start to look at ways on increasing my wife'e pension provision, because I can certainly see now that it is a bit unbalanced.

jamesd

rpc wrote: »

there would have been a "death tax" on transfer of a crystallised pension with a few exceptions.

Every spouse currently entitled to it tax free into a pension pot of their own is hardly few.

mania112

In response to my own question, an article I read on FT claims there are now justifiable IHT benefits to Drawdown pensions.

One who dies with a Drawdown pension will NOT need these funds to be included in a IHT calculation - so a big plus in the column for pensions Vs. other forms of saving/investing (the only other investment that covers off IHT liability is unquoted shares which will invariably come in at a higher risk of loss).

The [pretty important] caveat to this is that once you hit age 75 the rules change slightly where, again, IHT isn't a concern, but Income Tax IS. Any significant sums of pension will be liable to 45% tax for the beneficiary under the current regime.