What should I do

booveedoo

Hi. Advice please. I was about to draw on my pension pot in Jan but have seen this drop by 15% over the last few weeks. I have savings to last me just over two years. Now with regards tax efficiency, I was going to drawdown up to my tax free allowance, and then top up with savings each month to my required monthly requirement. So, question, should I just continue to use my savings and see what happens with my pension, or should I just stick with my original plan (drawdown and make up with savings)? Thanks

Notepad_Phil

No advice just opinions.

Even if I wasn't going to use it, I would always drawdown to your allowance but then put it into a Stocks and Shares ISA.

Or, if cash is limited and markets are e.g. down 20% then perhaps put 20% of the drawdown into the S&S ISA and top-up that with additional cash.

dunstonh

Now with regards tax efficiency, I was going to drawdown up to my tax free allowance, and then top up with savings each month to my required monthly requirement. So, question, should I just continue to use my savings and see what happens with my pension, or should I just stick with my original plan (drawdown and make up with savings)? Thanks

Effectively you are down around the same rate of income tax you would pay if the pension income was taxed.

How many years have you got until the state pension becomes payable?
Will you be continuing drawdown as a basic rate taxpayer after that?
Do you need all of the pension money being drawn for living expenses?   (you could pay upto £3600 back in again to get tax relief)
Do you have any cash or near cash assets inside the pension?  (i.e. when you know you are going to be drawing money from the pension soon, you usually reduce your investment risk on that amount.  Such as holding 2-3 years worth of cash inside the pension.  Cash is not affected by volatility so can be drawn regardless of external events)

booveedoo

dunstonh said:

Now with regards tax efficiency, I was going to drawdown up to my tax free allowance, and then top up with savings each month to my required monthly requirement. So, question, should I just continue to use my savings and see what happens with my pension, or should I just stick with my original plan (drawdown and make up with savings)? Thanks

Effectively you are down around the same rate of income tax you would pay if the pension income was taxed.

How many years have you got until the state pension becomes payable?
Will you be continuing drawdown as a basic rate taxpayer after that?
Do you need all of the pension money being drawn for living expenses?   (you could pay upto £3600 back in again to get tax relief)
Do you have any cash or near cash assets inside the pension?  (i.e. when you know you are going to be drawing money from the pension soon, you usually reduce your investment risk on that amount.  Such as holding 2-3 years worth of cash inside the pension.  Cash is not affected by volatility so can be drawn regardless of external events)

I have 11 years until state pension age and don`t intend to work again (health reasons).
I will be a basic tax payer for the rest of my time here.
My pension money will be used for cost of living. I already did that this year (payed in £2878 to get £719 tax relief, but hat has now been wiped out).
I need to check how my pension is made up. Thanks for the opinion.