Dilema

dunstonh

kidmugsy wrote: »

I thought Brown's motive for that change was rather transparent; still, it hasn't happened yet.

it certainly helped the rumours.

zagfles

Well worth a chat with pensionwise, free govt guidance scheme for people in your situation: https://www.pensionwise.gov.uk

zagfles

molerat wrote: »

With flexi access instead of taking 25% of the whole pot tax free at once then all further payments taxed you take no lump sum and each payment with 25% tax free and the remainder subject to tax.

I think you're talking about UFPLS (google it!)

Flexi-access can apply to all 3 ways of extracting money from a pension - drawdown, phased drawdown and UFPLS.

jamesd

Your plan to withdraw up to the personal allowance from the pension each year after taking the maximum tax free lump sum makes sense. You can keep the ongoing withdrawing tax free if desired by putting it into an ISA. Given your age you can get it all out of the pension tax free before you reach state pension age.

Sometimes people will just take money out of a pension and not do any more ta planning and in that case it can make them worse off then they could otherwise be.

If you dislike stock markets you might take a look at P2P. Anything from 3% to 15% available that way from UK providers but capital is at risk even though it's routine to have lending secured on property of some sort.

UFPLS is a more restrictive way of taking money out than drawdown. It's fixed at always 25% tax free lump sum and 75% taxable lump sum. In your case to take out £11,000 taxable to fully use your personal allowance you'd do a UFPLS of £14,666.66 with a 3,666.66 tax free lump sum portion. But there's little benefit from doing this instead of the more flexible drawdown. Can be charges differences but you can just pick a place with low charges.

Your existing pension pot may well be invested in stock markets already. What funds is it using?

You can't lose everything when using a typical fund invested in mainstream stock markets. A fund invests in companies. For the fund to lose all of its investment the company would have to become worth nothing, that is bankrupt and no assets left to sell. Even if you were in a fund holding just the 100 biggest UK firms, a fairly small number of companies, that would mean all 100 of then would have to become bankrupt with no assets. That's not a credible situation unless you're planning for scenarios following a global nuclear war. What does happen routinely is drops of 20% or so two or three times a decade and 40% once or twice a decade. But long term average has been a bit over 5% plus inflation growth. That's because it's like a roller-coaster in reverse, with drops and gains following.

LXdaddy

Bag of a fag packet first pass ideas...
Your "number" is £20K per year (what you think you need to live on)
You have savings and investments giving you income of £12K/year.
You have pension pots of ~£200K. VERY rule of thumb is that a safe withdrawal rate is 4%. 4% of £200K is £8K/year.


£12K + £8K = £20K - sounds pretty good to me .


And then of course State Pension kicks in at your State Pension Age.


That's the rough numbers - so you should certainly be able to afford to retire when you want.


There is more detail to look into...

• Is the £12K from savings and investments from inside tax free wrapper? If not then some of your tax free allowance will be used on that.
• There is much debate about the safe withdrawal rate (search for that term here) but it's a reasonable rule of thumb and the range of opinions suggest that lower SWR could be 3% or it could start out higher than 4%. Incidentally the safe withdrawal rate is about "how much can I withdraw from a pile of savings/investments with a reasonable expectation that the fund will not be empty before I die"
• what are the effects of inflation on your current savings and investments (yielding £12K/year)
• what level of state pension are you likely to receive if you stop paying NI contributions at 55

The various points which have already been touched on in this thread are all valid. You would benefit from taking some advice or at least guidance. (I'm not an IFA but I would recommend talking to a few and getting an understanding of how they could advise you)


In terms of the TFLS/PCLS specifically... Why do you want to take the £50K? It doesn't sound like you need the cash for some specific spending. I would be considering the pros and cons of taking the PCLS... What are you going to do with it? Is it going to work harder for you inside the pension fund or outside?

atush

The only proviso on the above is that they would be drawing from a 150K pot, not a 200K one as they would take the TFLS?

bigfreddiel

gerryr wrote: »

Hi all. I have this issue. Im 55 soon and want to take early retirement. I have considerable savings ( im lucky OR SAVY). I have 3 pension pots 1 private small 7.5k one company 38k and one larger company 158k .
I dont know what to do.
I need about 20k per year to live from so savings and investments I have about 12 k per year.
I think it would be good to do a draw-down pension. 50k as tax free then draw down 11k per year to supplement my income. from 150 k that gives me 13.6 years of money so say 12 years of actual money and 1.6 years of the money in charges. The 11k should keep me under the tax threshold. now you know the background my question is . can I find somewhere to put the money not at risk and just draw the 11k per year until it runs out? or what would you suggest. Thanks in advance for your comments. \i hope you can help

Just a small observation, you say you have income of £12k from savings, so how can your £11k from your retirement pot be under the tax threshold?

Cheers fj