Approaching 75

Powysshrew

Good Afternoon,

My dad is approaching 75 and has two untouched pensions. Currently he is still working part time and has no immediate plans to retire !

Due to this and with a reasonable amount of savings, he has little need to draw any money out of these schemes at the moment.

I am aware that before he reaches 75, he will need to either buy an annuity or transfer to a drawdown scheme.

The total amount in the pensions is approx 400k.

From the conversations we have had so far, he has decided that he wants to go for the drawdown option but beyond that we need help!

He has a meeting planned for Wednesday with the NFU (one of the current providers), but I realise there are probably better options out there.

Can anyone recommend any drawdown schemes that we should consider ?

Is it a good idea for him to withdraw his 25% tax free amount ?

Anything else we should consider ?

I would add that my dad has very little knowledge in this area and although I work in the finance industry only have limited knowledge but obviously want to try and learn to help him.

We would both be very grateful if anyone can offer any advice!


Thank you

xylophone

https://blog.1825.com/age-75/


https://www.pensionwise.gov.uk/en/appointments?gclid=EAIaIQobChMI_cq2jJCC4gIVLLHtCh1p3w2rEAAYAyAAEgJQbPD_BwE

An appointment with Pension Wise might be helpful?

He could consult an independent Financial Adviser.

https://adviserbook.co.uk/ He would tick "confirmed independent" and such other options as he requires.

He could transfer to a SIPP or other pension offering drawdown.

https://forums.moneysavingexpert.com/discussion/5583030/coolly-comparing-investment-platform-charges-snowmans-spreadsheet

Powysshrew

Thank you, I will take a look.

We have limited time as his birthday is at the end of this month....

Brynsam

Get an appointment with an IFA - now. With £400K under consideration, it's money well spent. Nobody here has adequate knowledge of your circumstances to give any really useful personalised guidance/thoughts.

Might just check he has an up to date will, though....

McKneff

Dont forget to contact the tv license peeps about his free license

tacpot12

As above, he could really do with some independent financial advice asap.

If you find he need to move money before he is 75, you could go with one of the well-known SIPP providers as a temporary measure. If so, pay attention to any exit fees, and make sure that the money does not remain uninvested for too long. Identifying where the money is to end up should be a priority. This link should help identify SIPPs with low exit charges:
https://monevator.com/compare-uk-cheapest-online-brokers/

If your Dad has no need of a tax free lump sum (and it doesn't sound like he does), it should remain invested with the rest of the pension.


One of the main issues you Dad will need to face is whether his is prepared to pay for someone to manage his pensions, or whether you can find a DIY option that is attractive to your Dad. DIY introduces extra risk and worry, and paying a professional to manage the pension can be a sensible option if you can find a good professional who will not charge too much for it. Remember if the pension portfolio is returning 4% pa, paying someone 1% pa to manage it, means you are actually paying away 25% of your annual return, so the fees are important, but then so is the quality of the management.

jamesd

Powysshrew wrote: »

Is it a good idea for him to withdraw his 25% tax free amount ?

Maybe, but it's not essential. This is because:

1. His own entitlement to a tax free lump sum does not end at age 75.
2. For death after age 75 those who inherit all or part of a pension pot have the money added to their normal taxable income as they withdraw each part of it. For death prior to 75 it's free of tax. Those under 18 still have an income tax personal allowance and money from an inherited pension can be taken at any age and used for their benefit - which includes, food, clothing and housing spending.
3. If he transfers the whole to a flexi-access drawdown product he's choosing to take 0% tax free lump sum, he can pick anything from 0% to 25% before doing that. Any money taken from a flexi-access drawdown product by him is taxable as normal income.
4. There isn't an age 75 limit for staying in an uncrystallised pension (meaning not a drawdown pension) so he could just transfer to a pension product without any age 75 restriction.
5. If he's being told that he has to buy an annuity or go into drawdown that is not a true description of all of his choices but it might be the only products that NFU offers. Be extremely careful not to believe such claims, providers are normally only going to say what is allowed by the products they sell, not all options.

Money in a pension doesn't count for inheritance tax so even taxable for beneficiaries could be better than an inheritance tax bill sometimes.

It's up to him but if he's confident that he has plenty of money he could take the tax free lump sum and give it or things bought with it away while he's still alive to see how it's used. Provided he lives for another seven years there would be neither income tax nor inheritance tax on the tax free 25%.

Powysshrew

A lot of good advice, thank you all v much.

His birthday is the 30/05 and therefore need to get moving and make some decisions.

Terron

Powysshrew wrote: »

His birthday is the 30/05 and therefore need to get moving and make some decisions.

A good day to be born Congratulate him for me.

McKneff

It is a good day haha, my husband is also 75 on May 30th....

Powysshrew

We have now met with the NFU.....

The drawdown product they offer is in conjunction with Barnett Waddingham.

The charges for advice are:

First £100,000 3.5%
Balance 2%

On top of this there is an initial fee of £250 and an annual fee thereafter of £200.

Therefore, we are looking at a charge of £9,250 in the first year.

To us this seems extortionate!