Short term drawdown

lymewalker

My wife and I are both 50 with DB pensions that can be taken in full at 60. We would really like to retire early at 55 and are no longer in the jobs that funded the final salary pension. We could take actuarially reduced pensions at 55. We are looking though, to fund SIPPs for the next 5 years that we then take and use up completely from 55 to 60 through drawdown until we take our full final salary pensions at 60.

Questions:
1. Is this allowable under the new rules? ( I cannot find any comment on this kind of arrangement anywhere)
2. Because it is only for 5 years we would not be looking to invest in funds etc. so presumably SIPP providers have some kind of cash option?
3. The only other thing I can think of is that the costs therefore would have to be very low. Annual charge, drawdown setup fee and a low minimum total size to be allowed for drawdown?

Or am I making things too complicated !!?
Many thanks

kidmugsy

lymewalker wrote: »

1. Is this allowable under the new rules? ( I cannot find any comment on this kind of arrangement anywhere)
2. Because it is only for 5 years we would not be looking to invest in funds etc. so presumably SIPP providers have some kind of cash option?
3. The only other thing I can think of is that the costs therefore would have to be very low. Annual charge, drawdown setup fee and a low minimum total size to be allowed for drawdown?

1 Yes. 2 Yes, but the interest rate is typically dreadful. Maybe you should search for one that pays atypically well. 3. Yup. Check the detail of the annual charge: for instance, I have a notion that HL's 0.45% p.a. is charged on investments but not on cash.


P.S.
http://www.dailymail.co.uk/money/investing/article-3223429/I-road-tested-13-largest-fund-supermarkets-best-platform-investment-is.html

dunstonh

2. Because it is only for 5 years we would not be looking to invest in funds etc. so presumably SIPP providers have some kind of cash option?

Some of the money is going to be there 10 years. You need to adjust your de-cumulation strategy to use a method suitable for what you are doing but going 100% cash would likely not be the best option.

lymewalker

dunstonh wrote: »

Some of the money is going to be there 10 years. You need to adjust your de-cumulation strategy to use a method suitable for what you are doing but going 100% cash would likely not be the best option.

Good point! :T Back to the spreadsheet. I also need to plan how to organise the drawdown to be most tax efficient as well.