Flexible drawdown pension

Shug159

Need some advice. I was 65 in January ,but I am still working, and taking my state pension.
I have a pension pot of £112000. I want to take 25% cash and invest the rest in a flexible drawdown pension. I will have about £70k in the bank. I get £183 state pension, if I take about £75 out of the bank a week. And a small sum out of drawdown, I should be ok. I am also mortgage free and will downsize in the future. I want to preserve the drawdown amount , as a pension for my wife, she has only worked part time, and might not get a state pension.
Any suggestions on drawdown pension provides ?
I could retire in a few months.
Cheers Shug

dunstonh

I will have about £70k in the bank.

Do you intend spending all of that and the 25% from the pension? If not, then why are you taking the 25% TFC up front?

Any suggestions on drawdown pension provides ?

Virtually all SIPPs and modern personal pensions do drawdown.

xylophone

I want to preserve the drawdown amount , as a pension for my wife, she has only worked part time, and might not get a state pension.

Has she checked? If not, now is the time to do so.

https://www.gov.uk/check-state-pension

Does her employer offer a pension?

https://www.gov.uk/workplace-pensions/about-workplace-pensions

bostonerimus

What do you intend to do with the 25% tax free lump sum? It could be invested to produce extra drawdown income. Is the £70k in the bank in cash or is it invested in something? If it's in a saving account getting say 2% then with 2% inflation and a £75 weekly withdrawal it would only last for 17 years and you should be planning for 30 years.

You've given no information about your budget or what a "small sum" from drawdown might be. If we assume you have £84k (£112000*0.75) in drawdown you might be able to safely withdraw 3% or 4%....depending on how it's invested...so that would be £2520 to £3360 a year.

LHW99

If your wife is only short of a few years for state pension, using some of the TFLS to buy her extra years could be good value.
Get her to check her record as xylophone says.

kidmugsy

Shug159 wrote: »

Need some advice. I was 65 in January ,but I am still working, and taking my state pension.
I have a pension pot of £112000. I want to take 25% cash and invest the rest in a flexible drawdown pension. I will have about £70k in the bank. I get £183 state pension, if I take about £75 out of the bank a week. And a small sum out of drawdown, I should be ok. I am also mortgage free and will downsize in the future. I want to preserve the drawdown amount , as a pension for my wife, she has only worked part time, and might not get a state pension.
Any suggestions on drawdown pension provides ?
I could retire in a few months.
Cheers Shug

In your shoes I'd drawdown as much as possible free of tax. I'd fill up an S&S ISA for your wife, and make maximum pension contributions for her. For providers:
http://monevator.com/compare-uk-cheapest-online-brokers/

We like Hargreaves Lansdown but we have smaller pension pots than you. You can probably find a somewhat cheaper provider at your size of pot. You're not likely to find one with a better service.

I don't rate HL for S&S ISAs: there are cheaper providers.

Shug159

After taking 25 % tax free , is the rest not taxable. ?

Shug159

3 or 4 % is ok. If I take £80 per week out of the bank , it's tax free. After taking a 25 % lump sum , is the drawdown not taxable ? On top of my pension.
Downsize my home will free up maybe 100 k
Thanks for all the comments.

ukdw

Shug159 wrote: »

After taking 25 % tax free , is the rest not taxable. ?

Yes the rest is taxable unless you have some tax free allowance left. The current tax free allowance is £11,500. Your £183 a week state pension would use £9,516 of this - leaving £1,984. For this tax year you will probably use up the rest with your salary. For next years tax year it would be enough to drawdown about £38 a week tax free.

Note also that your wife may be able to transfer another £1,150 tax free allowance to you if she earns less than £10k a year, plus the government may increase it by another £1,000 in the next few years which would allow about another £48 a week drawdown tax free.

dunstonh

After taking 25 % tax free , is the rest not taxable. ?

Only taxed above your personal allowance.

Please do not ignore the questions about why you want the 25% out all up front. A lot of people are doing this and just sticking the 25% in a bank account. If that is your intention then there are other methods of pension drawdown that are likely to be more suitable.

Shug159

Your right I was going to put it in the bank or isa
I already get my wife's tax break.
Have to start looking at a sipp now.
Thanks