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By not taking a 25% tax free pension pot lump sum would the wife be mad?



  • OldBeanzOldBeanz Forumite
    1.4K Posts
    Tenth Anniversary 1,000 Posts Name Dropper
    Assuming she wants to continue working; she wants a steadier income in retirement.
    Transfer your marriage allowance to her;
    She draws a pension that will give her £4000 (+25%) taxable allowance over her increased tax limit (she will have LGPS contributions to account for as well)- then pays the £4k into an LGPS AVC which she will be able to draw as cash when she retires.
    In addition to this she draws £5000 (+25%) with which she buys additional LGPS pension (£9k less lgps contributions and less £4k so less than £5k). 
    So an allowance of £14k means a withdrawal of just under £14k (+25%).
    She will then get tax relief on the pension she is now paying into and getting no tax relief (LGPS), maximises her tax allowance while adding additional tax free money to her pension as well as buying inflation proof pension.
    She does this for 3 years and retires having another lump.
    Hope this makes sense as busy today but will revisit tomorrow.
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