Early retirement, SIPP and Defined benefit pension

Techno

Some background. Hubby and I have just taken early retirement. We are in the fortunate position of having defined benefit pensions - he can claim his TPS pension in 8 months at 60 and I can claim my LGPS pension under the rule of 85 in 2 years time (at 60) plus my TPS pension at 65 - both of mine will have a very small actuarial adjustment. Anticipating finishing early, we have both paid into a SIPP in order to fund the pre-pension years and it is drawing this down in order to cover the gap between now and when DB pensions kick in (there will still be money left in the SIPPs after this which we can draw as we need) that I would like your thoughts on.
An annuity is ruled out so are we best to take the tax free lump sum now and then leave the rest invested to draw when we need knowing that all future withdrawals are taxable (is this crystalised?) or is it better to draw the tax free element as we go along so on a £10000 draw down £2500 tax free and £7500 potentially taxable depending on other income. We don't need a lump sum as have other savings so would use it as income. Is there a benefit to either of these or is it just personal preference?
many thanks in advance.

Dazed_and_C0nfused

In a tax year where you have no other taxable income taking £16,666 seems a popular option.

£4,166 TFLS and £12,500 taxable income.

Have you both checked your State Pension forecast on gov.uk?  It is important to read past the likely headline of £175.20 to see what you have each actually accrued to date (usually shown to 5 April 2020 at present).

Techno

Many thanks DandC. That was my thought but wondered if any benefit to taking the tax free lump sum in one go. Yes have checked state pension which we can't claim til 67 (😢). I am in line for full, new state pension and hubby was contracted out at one point so is 3 years short so will probably have to make a lump sum payment to get those (need to investigate cheapest way of doing that next)

Dazed_and_C0nfused

If he has any inclination to run his own business he can pay voluntary Class 2 National Insurance at c£160/year.

Voluntary Class 3 National Insurance is c£180/year.

Don't forget each year purchased isn't necessarily worth as much as the others.

Say he is £12/week short of the £175.20 then he doesn't get £4/week for each extra year, he gets £5/week for each of the first two and £2/week for the third.

Albermarle

hat was my thought but wondered if any benefit to taking the tax free lump sum in one go

Only if you have something useful/necessary  to spend it on . Otherwise it is best left invested in the pension until you actually need it , or use it gradually like already suggested to spread the tax free benefit over a longer period.

Techno

Dazed_and_C0nfused - I don't think he will want to start a business (although, he could potentially offer private maths tuition so never say never). I thought it was about £700 per year missed so £180 would be a lovely surprise 😁. Is it HMRC we contact to sort this? Albermarle - we have cash and S&S isa savings so don't need a lump sum - so will go with taking the TFLS in regular chunks rather than all at once. Have booked an appointment with the pension person at Hargreaves Lansdown for tomorrow morning so can look to get things in place. I believe tax can be a bit of an issue if you draw a big chunk at the beginning of the tax year as our tax masters at HMRC think this will be our regular monthly income 😂. Need to discuss what to do about that with them too. Thank you, both.