Early Retirement Pension Access Question

thriftylynny

I am 3 years into early retirement & was wondering if i could have accessed both my civil service & local government pension in a more advantageous or tax effective way?, I do realise i made my choice back then & probably can't change anything now, at the time i was just thinking that having a guaranteed monthly income for life (£510} & being able to nominate my daughter as beneficiary was good enough. I also took a tax free lump sum of 10k at the time which supplements my income a little, along with some investment yearly natural yield , I am now thinking whether i would have possibly been better off drawing down tax free lump sums from maybe one of the pensions instead of opting for the monthly incomes from both , not even sure if this would have been possible on either scheme ? In around 4 years time at 66 i will reach SPA & together with my pensions,my income will push me over my PA by around 2.5k , know that's not a lot at basic rate tax , but will make a difference to what will already be a modest income. I am just interested to know if i did best i could & any views please?

xylophone

I am now thinking whether i would have possibly been better off drawing down tax free lump sums from maybe one of the pensions instead of opting for the monthly incomes from both , not even sure if this would have been possible on either scheme ?

It wouldn't have been possible to take the pensions in this way from your defined benefit pension schemes.

Have you obtained a state pension forecast?

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

zagfles

Those pensions are Defined Benefit so you can't just take lump sums out of them, the only choice tends to be whether or not to take tax free cash (and how much) at the point you start drawing it. 

In any case there's no point dwelling on whether or not things would have better if you'd made a different decision in the past. If you intended to retire early, putting as much as you could into a separate pension eg a SIPP might have been an idea as you could then have withdrawn in the years before getting to state pension age to use up your personal allowance.

On a more useful note it's not too late for that, you can still pay in £2880 into a SIPP and get that grossed up to £3600, and withdraw it over the next few years, that could use up some of your personal allowance you seem to have spare. There's a long thread on this here, have a search. Even once you start paying tax it can be worth it as 25% is tax free.

Marcon

thriftylynny said:

I do realise i made my choice back then & probably can't change anything now,

 not even sure if this would have been possible on either scheme ? 

Probably = definitely

Not possible.

So nothing to fret about!

thriftylynny

Thank you for your replies , i feel much more reassured now & methinks i've just been reading far too many pension/investment forums on here with some large amounts flying around !! Yes i keep up to date with my state pension forecast with 2 more years vol contributions yet to be made which i will do . I also do the yearly SIPP thing of opening/ withdrawing to get the added tax relief . You're quite right Marcon i shall fret no more about my pensions ...just my dull investment which is a whole different ball game at present !!

Thrugelmir

thriftylynny said:

 i feel much more reassured now & methinks i've just been reading far too many pension/investment forums on here with some large amounts flying around !! 

Taking your pension early was in some respects detrimental. 

thriftylynny

Yes Thrugelmir i realise that, but at the time i was desperate to retire early & had to have an income of some sort. At the same time I downsized my MF house from an expensive area to a smaller house, cheaper area to enable me to have some investment income alongside taking my pensions early..that was the intention before Covid . Biggest mistake in my plan was downsizing as my old house has increased in value around 75k more than i sold it for against investment from sale of house an increase over 3 years of 10k & current house little price increase ..but that's a whole different subject.& for that reason only should i have waited . Sorry for going off subject there !

[Deleted User]

In my non expert view I think you need to move on and enjoy your retirement. You have some income and some investments, as well as your state pension to look forward too. What is the point of torturing yourself mentally with ‘if only, if only’? If you are now more relaxed and happy, your decision was the correct one for you. Comparing yourself with others will only bring grief and bitterness. You are probably better off than many and less well off than a few. If you have enough to live how you want to live that’s all that matters. Best wishes..

barnstar2077

[Deleted User] said:

In my non expert view I think you need to move on and enjoy your retirement. You have some income and some investments, as well as your state pension to look forward too. What is the point of torturing yourself mentally with ‘if only, if only’? If you are now more relaxed and happy, your decision was the correct one for you. Comparing yourself with others will only bring grief and bitterness. You are probably better off than many and less well off than a few. If you have enough to live how you want to live that’s all that matters. Best wishes..

I totally agree.  All any of us can do is make the best choice that we can at the time with the information we have available.  I have made some pretty silly decisions in the past, both personal and financial.  The only real failure would be to not try and do anything in the first place.  The world is your oyster!

thriftylynny

You are absolutely correct with those those thoughts, Baron & barnstar, thank you for putting things in perspective ., i really have tried to do the best i can & it's actually okay !!