Suggestions for early retirement planning

jamesd

enthusiasticsaver wrote: »

His latest statement says the benefits built up so far (March 15) was £17825 per annum and at age 60 (October 2018) it would be £18917 so very little difference considering the statement is 12 months out of date. Even if we wait until October 2023 (age 65 which is NRD) the benefits would only be £20885.

That makes borrowing the best option. 0% for purchase credit cards on long deals and/or balance transfer deals with long terms. Anything to stretch the time between stopping work and claiming so that the reduction is as low as possible. The benefit of getting the whole DC part tax free and the increase in pension will more than pay for borrowing costs of those sorts of level.

Better still would be using equity release (or if available a standard mortgage) to stretch it longer and try to increase the DC as much as possible with tax relief on the way in but not taxed on the way out.

enthusiasticsaver wrote: »

I think both the DC and DB pensions are in the same scheme as it says he has several options as to how the lump sum is made up. Would it still be a good idea to draw on the DC scheme first?

Yes if drawing on any is required but in this case it is even more appropriate to use borrowing instead.

There are many schemes where the DC pot can be used to pay up to 25% of the combined value of both the DC and DB pots. This is an excellent deal when it is available because it avoids the commutation loss on the DB income. The best lump sum to take is then the whole DC amount, if that is within the 25%. The catch is that this can only be done at the same time as the main pot is taken.

If the DC was transferred out, only 25% of the DC could be taken as a tax free lump sum.