What to do?

sanora

Hi
I am looking for advice with regard to the most tax efficient way to access a couple pension pots from previous employment while retiring form my Local Government Job.
I will be 65 in 18 months and have decided to retire. I have 2 pension pots from previous employment and 15 years’ service in the Local Government Pension Scheme (LGPS). I am looking for the most efficient way to access the funds without being hammered by tax. A number of questions come to mind and I am left wondering what to do and have I considered everything. Perhaps some of you could give me advice? I am thinking of taking the maximum lump sum from my LGPS and topping up my reduced LGPS monthly pension by drawing down 25% cash free from one of the pension pots leaving the rest in the pot to access at a later date. As the other pot has a value of £20k I was thinking of cashing this all in and taking the tax hit.
Can you please advise me of the most efficient way to go about the above or is there an even better way to get the most out of my funds?

kidmugsy

Do you want to leave your two pensions IHT-free to, say, spouse or children? If not then you presumably want simply to draw them but avoid income tax?

You plan to retire when: now or at 65?

Is 65 your scheme retirement age for LPGS? How big will your LPGS pension be at retirement?

sanora

Hi


Looking to retire September aged 63.5 years. Looking to use pension pots to fund retirement rather than leave to children or spouse - savings will see them fine. Haven't got figures for LGPS as I don't want to flag it up to my employer just yet.


The decision is made - just want to keep as much of the pension pots as I can.

xylophone

Have you obtained a state pension statement?

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

Do you receive an annual statement from LGPS concerning your pension benefits?

If your LGPS pension would be reduced by taking it early, why not leave it deferred and draw down the DC pensions to fund you to Normal Retirement Age?

If the two DC pots were transferred to a SIPP, you could take the 25% tax free lump sum as a salary replacement for as long as the money lasts and then draw down the balance monthly?