retire in September

luvchocolate

Hi all, My last day at work is 8th September, a couple of months ago I put my works pension into cash option, thank goodness now, unfortunately the annuities have dropped quite a lot.
Before the vote to leave the E.U my research showed £302 per month now its £257, may not sound a lot to some of you but it is to me.
I have filled in forms to my works F.A for him to check the whole of market and returned yesterday.
As I have 2 months to wait I am hoping it will recover a little.

I know even you very knowledgeable do not have a crystal ball but would be interested on your views please.

xylophone

You mentioned on another thread that your state pension is still in deferment.

Might you be better off considering putting your personal pension into drawdown, (leaving your state pension in deferment), and living on the personal pension until it is exhausted?

I am assuming that you will have no earned income once you retire from your job - however, this would not prevent your opening a SIPP, paying in £2880 and receiving tax relief of £720.

greenglide

I put my works pension into cash option, thank goodness now,

as we speak overseas investments, which should have comprised a significant part of your holdings, have seen a huge rise due to the collapse in value of the pound. Strangely enough even the UK markets are still doing well compared to pre referendum values but I wouldnt expect that to last.

Are you sure that an annuity is the right option? Is the quote you have inflation linked? Should it be?

Have you reached SPa yet? Have you considered deferring state pension for a while and taking the occupational pension as drawdown instead?

Is the "works FA" independent? Has he considered other options?

xylophone

Have you reached SPa yet? Have you considered deferring state pension

OP is already in deferment. Post 17 https://forums.moneysavingexpert.com/discussion/5479517

luvchocolate

Our F.A cannot really give advice, my pot is £85500, I have been deffering S.P since 7th Sept 2014.
You are right I will not be working I am 64 and tired!
Unfortunately due to circumstances beyond control I live in rented property.
Need an approx income of £1000 per month.
I have approx only £15,000 in savings and will be relocating soon and would need money available to furnish new property.
I do appreciate your pointers, thank you

maximumgardener

heres a thought for your consideration

keep your savings and use for its intended purpose
take your SP ......that should get you about £8000 pa
drawdown on your £85500 at say £4000 pa
(you may wish to consider a move from cash for some of it? thats up to you)
annuities do not seem great value but at least give some definite income.....i'd avoid those but thats just me!!


if this is your only income you will only pay tax on £1000 , so £200 tax= £11800 nett

maximumgardener

maybe you could bring some tax free cash into the equation??

xylophone

By way of example only.

In your position, I think that I would leave the state pension in deferment and transfer the £85,500 into an arrangement permitting drawdown.

You could then access the PCLS of £21375 which together with your savings of £15,000, should keep you going for up to three years, given your requirement for income of £12,000 a year.

You should be investigating the best current account (s) for your needs.

In addition, you can drawdown as much income as fits within your tax free personal allowance.

You can pay £2880 per annum of that income into a personal pension and receive tax relief of £720.

Doing the above could keep you going into your early seventies by which time your deferred state pension could have appreciated nicely - you might even put it off for another couple of years by drawing down the "£2880/720" referred to above.

xylophone

http://www.thepfs.org/yourmoney/find-an-adviser/

may be worth a look.

jamesd

luvchocolate wrote: »

My last day at work is 8th September, a couple of months ago I put my works pension into cash option, thank goodness now, unfortunately the annuities have dropped quite a lot.
Before the vote to leave the E.U my research showed £302 per month now its £257, may not sound a lot to some of you but it is to me.
I have filled in forms to my works F.A for him to check the whole of market and returned yesterday.
As I have 2 months to wait I am hoping it will recover a little.

Don't buy an annuity, that's throwing away money. Just continue deferring for at least three more years, a total of five, and perhaps up to ten, living on the pension pot in drawdown during this time. Or stop sooner if you can't say that you are in normal good health for your age. Since you've been deferring for a couple of years you're getting the superb 10.4% mostly inheritable by a spouse increase level from deferring because you didn't reach your state pension age from 6 April 2016.

See Drawdown: safe withdrawal rates for many useful things to consider when managing income drawdown. You shouldn't find it particularly hard to get something like twice the inflation-linked annuity income level, or a bit above the level (not inflation linked) annuity level but with inflation allowance, whether that's using pure drawdown, state pension deferral or some of each.

As xylophone described you can further exploit the situation by drawing taxable money from your pension up to your personal allowance and paying in 2880 and taking out 3600 each year (uses 2700 of personal allowance) to get an extra 720 a year of after tax income. This year you can pay in more, up to your total gross pay times 0.80 if you're a basic rate tax payer, which will be grossed up by basic rate tax relief to 100% of your gross pay. Ask if that would be more than £40,000.

You can't trust that financial advisers will tell you about the state pension deferral option, perhaps in part because they aren't required to even though it provides higher income for your money unless you have significantly reduced life expectancy or are significantly older than state pension age into your late 70s or 80s.

You don't need to skimp while deferring. Just pay yourself at least the after-deferral state pension income level plus the amount the annuity would pay out of your pension pot in drawdown, having taken the 25% tax free lump sum.

xylophone

Are you using the best current account strategy now?