Dual Drawdown Fund Dilemma

LHW99

We have an imbalance in DC pots too (though not as large as the OP's).

Our plan is to run down the larger one until they are more equal, because while they are inheritable, if one of us needs care, their own pot would be used for that. Which could leave the survivor short.

If that doesn't happen, all is good.

Alexland

Similar imbalance with my pensions over £400k and my younger wife's over £150k but we still have nearly 20 years before I can access so while we are still working our strategy is to (1) max my wife's contributions by salary sacrificing all her income above the personal allowance (2) minimise my contributions to only those required to avoid higher rate tax and child benefit claw back and (3) hold the proportion of lower growth bonds in my pension as that's the one that would be drawn first anyway.

Although (1) and (2) won't really work this tax year as my minimised contributions will still be more than my wife's maximised contributions and (3) didn't work either because during the recent crash I chucked the bonds into equities and it caused my pension to grow faster. Need to develop more self-control when I see equity markets looking such good value.

Under the current rules (which will almost certainly change by then) we would continue to contribute the £2,880 into my wife's pension from when she stops working until she is 75 (the money could come from either my PCLS or from age 60 our LISAs) but ensure we are at least drawing enough from both pensions when they become available to use our full personal allowances each tax year.

GSP

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

garmeg

GSP said:

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

Fair enough but I thought it worth mentioning.

barnstar2077

GSP said:

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

As he probably makes a percentage every year, he doesn't want that money to run out any time soon! : ) 

cfw1994

barnstar2077 said:

GSP said:

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

As he probably makes a percentage every year, he doesn't want that money to run out any time soon! : ) 

I think GSP should sack the IFA and employ us.  

We can take a slightly smaller % between us, & I bet he is getting a quicker set of responses here!

shinytop

GSP said:

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

You don't have to spend it; just get it out of the pension.  But it depends on your tax situation.  

NottinghamKnight

shinytop said:

GSP said:

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

You don't have to spend it; just get it out of the pension.  But it depends on your tax situation.  

Why?

garmeg

NottinghamKnight said:

shinytop said:

GSP said:

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

You don't have to spend it; just get it out of the pension.  But it depends on your tax situation.  

Why?

Lifetime allowance charge at 75 / earlier  annuitisation on one side v income tax (maybe also child benefit tax) on the other.

shinytop

NottinghamKnight said:

shinytop said:

GSP said:

garmeg said:

With a fund that high you probably dont have much LTA left so beware of any LTA charge at age 75 should you not draw down enough from your pot prior to age 75.

It’s a bit of a long story, but my IFA thinks I am spending too much too soon already.

You don't have to spend it; just get it out of the pension.  But it depends on your tax situation.  

Why?

Why what?  Get the growth out of the pension to avoid breaching LTA at age 75.  But not so much that you pay higher rate tax.  But please tell me if that's wrong as it's what I was going to do.