Next Steps?! where do we go from here?!

Fruitbatuk1

Hi - I could really do with some guidance...
My husband is 60, still working, planning on retiring in 2 -3 years.
He has a total pension pot of approx 600k, made up of 4 or 5 DC pots the largest which is 300k and is the one he's still paying into, and one final salary one that is worth about 2.5k a year at 65 or 90k cash out/ transfer (he didn't pay into this one for long).
With the pension changes this april he wants to withdraw as much money asap before those labour wotsits get in and change all the rules again.

We've tried to seek pension advice from professionals but they seem to want many ££££'s and basically still want to sell you an annuity! (which we don't want). For clarity and to add to background I am 20 years younger - lots of working ahead of me (and my own pension), but another reason for wanting money out is so long term (to invest in property much like the rest of the country i imagine!) is to have access as my assumption is (perhaps incorrectly?) that an annunity would only guarantee me income up to 10 years after he passes (obviously i am praying this is many many decades away yet!)
so, after all that background our end goal is to get as much money out, as soon as possible, whilst paying least tax possible.

My questions are:
1) should we leave the final salary pot or cash it in/ transfer to one of the DC pots? (i'm assuming cash in?)

2) we want to take 25% lump sum asap in april but assume can't do that from the biggest pot he's still paying in to? unless he was to close it, and open another for the few remaining years? if he can't close and open with existing employer assume we could take 25% or remaining pots and just hold out another couple years for the biggest pot?

3) would we then be best to just (after taken lump sum) drawdown up to 40k is per annum so we pay minimal is tax until the pots are empty? is this something they'll let us do? should god forbid worst happen and he not be around to finish emptying pots (12 is years at 40k) would i be entitled to what's left? or would it 'disappear' with him like an annuity?

4) where in gods name do we start with this? should we bite bullet and pay an advisor or can we administer ourselves by going to each pension provider separately and informing them what we want to do?

Thanks it advance and sorry it's so long!
Fruitbat

atush

I would leave the DB pension.

If you are worried abt Labor, then vote conservative (and not Ukip).

No you cant take 25% from his current pension.

What will you do with the 25% of the 300K you can get out?

Fruitbatuk1

Buy to let... (I think!)

Fruitbatuk1

is leaving the DB/ Final salary really worth it - at 2.5k a year it hardly seems worth it? isn't it more valuable cashed in as a lot of 2.5k's in 90k? or am i missing something.
Thanks for replying.

atush

Yes it is worth it. It is indexed for life and I assume provides a spousal pension.

It will be the bedrock of your pension income after you draw out your 300K and spend it lol.

Pensions grow untaxed. Property you pay tax on income and on gains. Plus you are growing older and being a pensioner with the hassle of BTL is not really wise in many cases.

kidmugsy

Fruitbatuk1 wrote: »

my assumption is (perhaps incorrectly?) that an annunity would only guarantee me income up to 10 years after he passes

No, the usual widow's pension runs until her death: he can opt for, say, a 50% or 100% widow's pension as part of setting up the annuity, if that's what he wants. The argument against an annuity is that at his age, and especially given your age, it's likely to be pretty expensive.

Fruitbatuk1 wrote: »

should god forbid worst happen and he not be around to finish emptying pots ... would i be entitled to what's left?

Yes of course: indeed if he died before 75 you'd be entitled to draw from the surviving pot tax-free (though whether that would survive Mr Balls .....).

Fruitbatuk1 wrote: »

would we then be best to just (after taken lump sum) drawdown up to 40k is per annum so we pay minimal is tax until the pots are empty?

"up to" is the operative bit. He's still working so his taxable income will be his salary etc plus his (non TFLS) pension withdrawal plus any income from savings and investments. For all we know that could mean his paying higher rate tax on his pension withdrawal. Moreover he'd have income tax to pay on his BTL rent (or you would, if the intention is that you own the BTL), and then CGT when you/he sells up.

I suspect that you really should sit down with an IFA - these sums are pretty large. Especially if he wants to leave and rejoin a scheme as a ruse to let him take out TFLS. (In his shoes I'd be tempted; a limit on the size of TFLS permitted sounds to me to be a very Labour thing to do.)

Fruitbatuk1

ok so it sounds like we should take the 25% of the 300k we have access to, and just sit on the rest till he actually retires in 2 years, then at that point take the 25% of the additional 300k and start drawing 40k ish a year so we don't hit the higher rate?
no other income for him, it would be pension only ones he leaves work.
I am a high rate tax payer.
Assume if he's taking 40k and I'm already high rate at point we have buy to let may as well be in joint names? or is there another reason best in sole name?

i'll check on the spousal pension of the final salary one as your right if it provisions that without a cap in years it might be worth holding on to.

Back to one of my original questions... Can we contact the pension companies direct to arrange this or do we HAVE to have financial advice? it seems crazy expensive and i'm struggling to see value in it! (I'm sure someone will tell me i'm wrong!) can anyone recommend someone or recommend where to look for one? a couple of the ones that advertise on TV that we've contact seem like chancers who still push annuities and want 2 - 3 %!!! which seems madness.
Thanks for all your help.

jem16

Fruitbatuk1 wrote: »

Back to one of my original questions... Can we contact the pension companies direct to arrange this or do we HAVE to have financial advice?

You don't have to have financial advice with DC pots. Whether you need it or not is another question. Do you feel confident enough to arrange your own Drawdown strategy or do you need help with this?

it seems crazy expensive and i'm struggling to see value in it! (I'm sure someone will tell me i'm wrong!)

It can be well worth it if the alternative is losing much more through a badly constructed drawdown portfolio. DIY is obviously cheaper if you know what you're doing. If you don't then you pay a professional just like any other job that needs doing.

can anyone recommend someone or recommend where to look for one?

Look on https://www.unbiased.co.uk for an IFA or Restricted whole of market adviser.

a couple of the ones that advertise on TV that we've contact seem like chancers who still push annuities and want 2 - 3 %!!! which seems madness.
Thanks for all your help.

Annuities can still be a good choice for many. However you should be able to discuss various strategies. All will want paid but 2/3% on £600k seems far too high.

atush

I agree about the fee. On 600K I would expect a set fee not a %.

kidmugsy

Fruitbatuk1 wrote: »

ok so it sounds like we should take the 25% of the 300k we have access to, and just sit on the rest till he actually retires in 2 years, then at that point take the 25% of the additional 300k and start drawing 40k ish a year so we don't hit the higher rate?

It depends on your view of the political risks. If you think that Labour, for instance, might decide to limit the TFLS to £30k, you might want to work out how to get at all his TFLSs pronto. Or you might think it through now, but defer action until you see the election results.