Pausing drawdown ?

TadleyBaggie

No that sounds right if you hadn't already taken all your 25% TFLS, any drawdowns until that point is reached would be not taxed. 

MX5huggy

OK so your DB of £40k is using up all your tax allowance. So as long as you don’t drawdown enough to push you into the higher rate band after you’ve used up the 25% tax free it doesn’t really matter if you stop or carry on from the immediate tax angle. You might still like to get it out and put it in an ISA to grow in that tax free compared with leave in the pension it grows then you pay tax when you take it out (but it makes no difference). You might like to wait till April when tax will be 19% (unless you’re in Scotland). 

dunstonh

Would it make sense to stop withdrawing for the time being ?

What is your drawdown strategy/retirement income plan?

Events like this were always coming and will occur multiple times over your retirement.  So, they should be factored into your retirement plan.

The idea was to use the pot up before a couple more pensions kick in in 5 years time, or the longer the better. 

And has that objective changed?

Clearly your rate of drawdown is unsustainable and it's going to run out, but a short-term move from, £95k to £88k is insignificant in terms of margin of error.   At current value its still around 10 years and you only needed it to last another 5 years.

So, does it still fit with your retirement income strategy?

ossie48

dunstonh said:

Would it make sense to stop withdrawing for the time being ?

What is your drawdown strategy/retirement income plan?

Events like this were always coming and will occur multiple times over your retirement.  So, they should be factored into your retirement plan.

The idea was to use the pot up before a couple more pensions kick in in 5 years time, or the longer the better. 

And has that objective changed?

Clearly your rate of drawdown is unsustainable and it's going to run out, but a short-term move from, £95k to £88k is insignificant in terms of margin of error.   At current value its still around 10 years and you only needed it to last another 5 years.

So, does it still fit with your retirement income strategy?

I already have a decent DB pension that covers daily living expenses. The idea of transferring / accessing a smaller DB pension was to enable my wife to retire now and in part replace her wages primarily up until 2027 when she will get two pensions. This would keep us at the same standard of living. Ideally it would be nice if this small pot could last 10 years until I reach state pension age but that would be a bonus.

I chose £800 as a conservative amount to allow for any leeway and fluctuations but yes the primary objective is to last until 2027, which clearly it will. I have no issues in using it up completely, It's a pot that never really came into any retirement planning as initially it was so insignificant until I was given a CETV that I couldn't refuse (5 years employment in the 80's)

The only reason I was thinking of pausing drawdown was to simply let it recover from its recent losses however I take on board your point that its recent nose dive is insignificant. Perhaps I'm being a little too cautious. 

NannaH

Are you selling funds on a monthly/quarterly basis for income or do you have a large cash float in there?  

If it was me,  I would sell enough now to cover 2/3 years, then any further drops won’t matter so much and gives the rest time to recover,  at least the cash you have won’t be affected. 

If it keeps dropping and you keep selling regularly at a loss then I think that’s the worst option. 

dunstonh

The only reason I was thinking of pausing drawdown was to simply let it recover from its recent losses however I take on board your point that its recent nose dive is insignificant. Perhaps I'm being a little too cautious. 

Did you operate a cash account as part of your retirement income strategy?  

e.g. sufficient cash is held in the pension to cove the next x years worth of withdrawals.  x = a figure you feel is right. Often 3 years worth.   Withdrawals are then funded from the cash and not through sale of units and the cash account only refloated during positive periods.
Or did you hold a cash float outside of the pension which would be used during periods of negativity and refloated during positive periods.

ossie48

dunstonh said:

The only reason I was thinking of pausing drawdown was to simply let it recover from its recent losses however I take on board your point that its recent nose dive is insignificant. Perhaps I'm being a little too cautious. 

Did you operate a cash account as part of your retirement income strategy?  

e.g. sufficient cash is held in the pension to cove the next x years worth of withdrawals.  x = a figure you feel is right. Often 3 years worth.   Withdrawals are then funded from the cash and not through sale of units and the cash account only refloated during positive periods.
Or did you hold a cash float outside of the pension which would be used during periods of negativity and refloated during positive periods.

I do have sufficient surplus cash elsewhere to cover the next three years withdrawals at least if I was to pause them. It's currently partly in premium bonds which I was thinking of putting it into a fixed rate bond at 4.5% for the next two years. I also have a six figure sum with VLS. 

Albermarle

It sounds like with a very good DB pension, surplus cash savings, >£100K in other investments + state pensions to come, then you sound well set up for income/retirement. So whether you halt drawdown on this DC pension, or keep going, it probably is not going to make a huge difference in the great scheme of things. 
You could always go half way, and just reduce it by a % and supplement income with cash for a while.

On a separate point there are numerous posts on the Savings and Investments  forum, speculating about future savings rates. The consensus generally is to wait a bit longer before going for a fixed rate longer than a year.

wjr4

Do you have an IHT liability?