Deceased husband - pension pot options

cjking

atush wrote: »

But I would be inclined to take the lump sum as it is tax free. Then put as much as you can each year into AVCs (as you have SS) going forwards. Think there is a lower limit ie you cant put in enough that would lower income below MW.

I think it's tax-free anyway, so if she takes it as a lump sum then invests it, some of it will be in a taxable account for a while. She will pay more tax than if she leaves it in drawdown and invests it there.

cjking

If fees at the provider are a problem, look into transferring to a different provider.

At Youinvest, according to their calculator, 100K invested in ETFs via an ISA would attract fees of £30, via a SIPP £100. An extra £70 a year in fees is not a huge extra expense to keep the investments in a pension account. OK, on top of that there's a £25 fee each time you take money out, and £10 each time you sell shares, but if you do both once a year, it's not a lot.

atush

cjking wrote: »

I think it's tax-free anyway, so if she takes it as a lump sum then invests it, some of it will be in a taxable account for a while. She will pay more tax than if she leaves it in drawdown and invests it there.

No it wont. if she invests it in a pension or S&S isa. But yes, she would pay nore tax using it for DD as it would only be 25% tax free isntead of 100%.

Basically, taking the 100K tax free, and investing it again in pensions and isas for herself will mean saving tax and getting tax relief on top.

kidmugsy

atush wrote: »

Basically, taking the 100K tax free, and investing it again in pensions and isas for herself will mean saving tax and getting tax relief on top.

Pensions yes, ISAs no. You've got the wrong end of the stick there, atush. See
http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0521

atush

I know ISas dont get TR.

My point was putting it in tax wrappers (of which one will get you TR).

AS opposed to using it as a DD pot. What is better, 25% TF or 100% TF?

And cjking said it would be in taxed accounts. Which it doesnt have to be.

kidmugsy

atush wrote: »

My point was putting it in tax wrappers.

It's in a bleedin' tax wrapper already. Taking some money out to contribute to a pension is just fine. Paying charges to move it from an existing tax-wrapper to an ISA tax-wrapper would be bonkers.

Linton

kidmugsy wrote: »

It's in a bleedin' tax wrapper already. Taking some money out to contribute to a pension is just fine. Paying charges to move it from an existing tax-wrapper to an ISA tax-wrapper would be bonkers.

AIUI the problem is that the OP has the choice of either taking the pension as is and receiving the benefits 100% tax free when she reaches 55 or taking it all out of the pension environment now. If she needs access to some of the money prior to 55 she cant keep it in the pension.

atush

kidmugsy wrote: »

It's in a bleedin' tax wrapper already. Taking some money out to contribute to a pension is just fine. Paying charges to move it from an existing tax-wrapper to an ISA tax-wrapper would be bonkers.

What charges? a small platform charge?

peanuts compared with paying tax on 75K of it. AS could happen if left where it is.

kidmugsy

atush wrote: »

What charges? a small platform charge?

How about commissions, spreads, stamp duty?

atush wrote: »

peanuts compared with paying tax on 75K of it. AS could happen if left where it is.

But you are completely missing the point. Your 75k taxable is a sheer invention. You are plain wrong. This is a pension inherited from her spouse. There is no tax to pay on withdrawal. Look at the ruddy links.

cjking

Linton wrote: »

AIUI the problem is that the OP has the choice of either taking the pension as is and receiving the benefits 100% tax free when she reaches 55 or taking it all out of the pension environment now. If she needs access to some of the money prior to 55 she cant keep it in the pension.

An inherited pension can be taken via draw-down straight away, she doesn't have to wait until 55.