Full pension withdrawal avoiding 40% rate

jamesd

Ask the adviser to provide you a letter saying that you have taken advice. That's all you need. You don't need to follow the advice. The adviser will presumably at least intellectually agree that the state pension will pay you more even if they think that they can't make that as a recommendation.

webtrekker

kidmugsy wrote: »

You seem determined to foul this up. I repeat, 40% tax sets in at £43k. The width of the 40% band is £32k. What you've suggested will get you paying 40% tax on £7210.

Sorry, I really am being thick!

I can understand now how you arrived at the figure of £7210. So am I right in thinking that my total tax bill should be as follows? -

£7210 @ 40% = £2884
£32000 @ 20% = £6400

Making a grand total of £9284 payable to HMRC

If that's correct, then I may just take the hit and withdraw the whole pot.

I understand the advantages of deferral, but the thing that's been bugging me from the beginning is the fact that my dependants get nothing on my death, whereas taking the lot now means the money will be ours to do as we please and an untimely death will not rob my wife of the remaining money.

I'd like to thank everyone who has been involved in this thread for their patience and expertise. I have had much better, and quicker, advice from yourselves than from the financial adviser at the Newcastle Building Society, although I do realise his options were limited.

Brightspark87

webtrekker wrote: »

I do apologise. I was a bit too hasty in reading your post.

Taking my 25% tax free lump sum then taking the rest in lower amounts over subsequent years is what I really wanted to do, but Royal London doesn't offer a Drawdown scheme and my IFA (from Newcastle Building Society) is dragging his feet because he thinks the GAR is the best offer. So my next question is ...

Do I need a Drawdown scheme to enable me to access the remainder of my pot as and when needed, or will Royal London just retain the pot and allow me to make further withdrawals in future years?

As you can see, I'm really confused by all this! It seems to me that all these wonderful options the Government talk about are nothing but hot air when it comes to actually arranging one. The options offered by Royal London are severely limited.

I can assure you without doubt that Royal London do offer these plans I use them all the time!

webtrekker

Here's my calculation the way I see it ............

kidmugsy

webtrekker wrote: »

I understand the advantages of deferral, but the thing that's been bugging me from the beginning is the fact that my dependants get nothing on my death, whereas taking the lot now means the money will be ours to do as we please and an untimely death will not rob my wife of the remaining money.

You are muddling two things together. You don't want to buy an annuity - fair enough, your shout. But once the money is in, for instance, a SIPP it will all be available to your family after death. In fact, if you die before 75 it will be available tax-free, the whole lot of it.

It's your intention to withdraw the lot and pay unnecessary tax that seems rash to me.

GunJack

webtrekker wrote: »

Yes. My wife is 61 in April this year. She's in good health with no major ailments. She will reach her state pension age in April 2021 (66yrs old) and has been quoted a state pension of £142.24 + COPE of £22.30 = £164.54 a week.

My own quote is for:

Age 65 in January 2017 and eligible for state pension then. I will receive a state pension of £136.04 + COPE of £33.70 = £169.74 a week.

I'm beginning to understand the advantage of deferral of my state pension now!

Do you have another pension other than the one you're talking about here? If you don't, won't that mean that you WON'T get the extra COPE estimate in your pension statement, as this pension plan is what would be providing the COPE??

atush

So you willing to throw away over 9K, just to get your hands on it all at once?

I am seeing you having a very poor retirement indeed

jamesd

webtrekker wrote: »

Making a grand total of £9284 payable to HMRC

Vs nil to HMRC and an extra £9284 in your own pocket? Doesn't make sense, do it over several years and pay HMRC nothing if you're going to just take it out.

webtrekker wrote: »

I understand the advantages of deferral, but the thing that's been bugging me from the beginning is the fact that my dependants get nothing on my death

Term life insurance is very cheap for those of normal good health. Easy to pay for the cost out of a small part of the increased state pension income. Beyond the term of the insurance you can just invest some of the money and those who survive you will still end up getting more, and you will while alive.

Money in a pension pot is inherited tax free for death before age 75, after that it's taxed at the recipient's tax rate as normal income and they can choose when to take the money.

mgdavid

webtrekker wrote: »

....... whereas taking the lot now means the money will be ours to do as we please ..........

you can't take the lot now, you can only take 'the lot minus the £9k you are going to give the taxman' now.
You really need to think harder about this.

£9000 - sheesh!

maximumgardener

mgdavid wrote: »

you can't take the lot now, you can only take 'the lot minus the £9k you are going to give the taxman' now.
You really need to think harder about this.

£9000 - sheesh!

Indeed!
why would you give £9000 to HMRC when you can avoid that?
unless...you really NEED to get the money out quickly for some reason ??