We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Pension strategy

ajbell
Posts: 1,151 Forumite
I am 54 hoping to retire in 18 months at 56, house £300k paid for and no debts, £130k in savings, increasing at 2k a month.
I have a deferred DB pension that will pay me £16k a year at 60 with a guaranteed 5% yearly increase, I will take this at 60 (max age).
I also have a current DB pension which will pay £4900 in 18 months or £215,000 if I take it as cash (this is offered on the company website). If I take the cash and add it to my SIPP then that would be £230,000, take 25% and add it to my savings, that would leave me £172,000 to draw down.
So when I retire it will be 44 months before I am 60 and can claim the £16k DB pension so I will draw down up to the threshold (£1000 ish per month) to finance the 44 months and that will leave around £130,000 in my SIPP. I can live comfortably on £1000 per month.
How does the above sound? and have I missed anything?
What do I do with the remaining £130K in my SIPP?
I have a deferred DB pension that will pay me £16k a year at 60 with a guaranteed 5% yearly increase, I will take this at 60 (max age).
I also have a current DB pension which will pay £4900 in 18 months or £215,000 if I take it as cash (this is offered on the company website). If I take the cash and add it to my SIPP then that would be £230,000, take 25% and add it to my savings, that would leave me £172,000 to draw down.
So when I retire it will be 44 months before I am 60 and can claim the £16k DB pension so I will draw down up to the threshold (£1000 ish per month) to finance the 44 months and that will leave around £130,000 in my SIPP. I can live comfortably on £1000 per month.
How does the above sound? and have I missed anything?
What do I do with the remaining £130K in my SIPP?
4kWp, South facing, 16 x phono solar panels, Solis inverter, Lincolnshire.
0
Comments
-
Depends what you want that £130k to do? To grow? To preserve?
Do you want to access it at some point? Plan to leave for beneficiaries?0 -
Its more about the most tax efficient way to get it out, I don't really need it for day to day living.4kWp, South facing, 16 x phono solar panels, Solis inverter, Lincolnshire.0
-
mmm. You say your current DB pension benefits include the option to transfer the cash value to another pension. Whether that avoids with the legal requirement that transferring out of a DB pension to a DC pension requires advice from an IFA having been received I dont know. You may well have to get the advice before your SIPP supplier will accept a transfer-in.
£1000/month sounds pretty frugal but you will eventually be on a gross income of £24K-£25K once you get your state pension so you should be living a life of unaccustomed luxury. Why not draw down more than £1K/month so its not so much of a shock?
You havent mentioned a spouse.
If you can live happily without the £130K then I suggest you leave it invested in the SIPP at a moderately high risk level. This will provide some protection should inflation exceed 5%.0 -
I already live on around £1000 per month and just put the other £2000 in savings each month.
I wouldn't describe my spending as frugal, I have everything I want and the things I like doing cost nothing as I like to walk, run and cycle.
I am open to the idea of drawing down more, my question was more about whether this was the best strategy tax wise.4kWp, South facing, 16 x phono solar panels, Solis inverter, Lincolnshire.0 -
I already live on around £1000 per month and just put the other £2000 in savings each month.
I wouldn't describe my spending as frugal, I have everything I want and the things I like doing cost nothing as I like to walk, run and cycle.
I am open to the idea of drawing down more, my question was more about whether this was the best strategy tax wise.0 -
I am 54 hoping to retire in 18 months at 56, house £300k paid for and no debts, £130k in savings, increasing at 2k a month.
I have a deferred DB pension that will pay me £16k a year at 60 with a guaranteed 5% yearly increase, I will take this at 60 (max age).
I also have a current DB pension which will pay £4900 in 18 months or £215,000 if I take it as cash (this is offered on the company website). If I take the cash and add it to my SIPP then that would be £230,000, take 25% and add it to my savings, that would leave me £172,000 to draw down.
So when I retire it will be 44 months before I am 60 and can claim the £16k DB pension so I will draw down up to the threshold (£1000 ish per month) to finance the 44 months and that will leave around £130,000 in my SIPP. I can live comfortably on £1000 per month.
How does the above sound? and have I missed anything?
What do I do with the remaining £130K in my SIPP?
It sounds like a solid plan to me but I am staggered that there is a CETV of £215,000 on an annual DB pension of just £4900. You will need to take advice and probably pay a pension transfer specialist as it is worth more than £30k.
It sounds like you can withdraw more than £1k per month but obviously you would have to pay tax on it so I assume you would just leave the £130k invested in your sipp.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
The 365 Day 1p Challenge 2025 #1 £667.95/£162.90
Save £12k in 2025 #1 £12000/£70000 -
enthusiasticsaver wrote: »It sounds like a solid plan to me but I am staggered that there is a CETV of £215,000 on an annual DB pension of just £4900. You will need to take advice and probably pay a pension transfer specialist as it is worth more than £30k.
It sounds like you can withdraw more than £1k per month but obviously you would have to pay tax on it so I assume you would just leave the £130k invested in your sipp.
Similar to what I had. An early retirement pension of £9.5k or a CETV of £395k.
Similar multiplier.
I took a reduced pension of £7.5k and PCLS of £49k.
Due to LTA issue, the CETV didn't appeal.
The DB in payment can be the equivalent to a bond constituent of my overall pension provision.0 -
I also have a current DB pension which will pay £4900 in 18 months or £215,000 if I take it as cashthat would be £230,000, take 25% and add it to my savings, that would leave me £172,000 to draw down.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 350.4K Banking & Borrowing
- 252.9K Reduce Debt & Boost Income
- 453.3K Spending & Discounts
- 243.4K Work, Benefits & Business
- 597.9K Mortgages, Homes & Bills
- 176.6K Life & Family
- 256.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards