Order in which to take pension assets

Adpro2

Reluctant to use an IFA after previous bad experiences of them.

Plan to retire in 6 months time at 58, basis tax rate payer. All that I have read suggests using the least tax efficient assets first but Im not clear on why this is or whether it suits my circumstances. I would have thought leaving the investments that have the most growth potential should be used last. Any insight would be good.

My position is as follows:

DB Pension 25k pa. (Increases 1,700 pa each year I defer it. Transfer value 450k)

DB Pension 4k pa. (capped final salary. Transfer value 110k)

Shares 150k (4% div approx.)

SIPPs 95k

ISAs 100k

Savings/Premium bonds etc 181k

DT2001

What income are you looking for and are you expecting it to increase/decrease over time?

El_Torro

Congratulations on retiring before you’re 60.

When it comes to selling investments it makes sense to sell your unwrapped shares first, before your SIPP, or ISA. 

Without knowing more about how you plan to spend your money it’s difficult to know what to suggest. 

How much do you need to live on every year? Are your two DB pensions paying out already? How much cash are you comfortable holding? You currently have a lot of money tied up in savings. 

Albermarle

The DB transfer values are not really relevant, as it is difficult, expensive and not normally recommended to give up guaranteed income, especially now the transfer values are much lower then they were.

In your final year at work you may want to maximise contribution to your SIPP, to get maximum tax relief, and have the money in a sheltered tax environment, also max into ISA for same reason.

Once retired, the guidance is to make sure you at least use up your personal allowance. So take at least £12570 in taxable income .

dunstonh

Reluctant to use an IFA after previous bad experiences of them.

All 15,000 of them?

All that I have read suggests using the least tax efficient assets first but Im not clear on why this is 

All tax wrappers can invest in the same investments.   The only difference is taxation and process.   So, it makes sense that you do it in an order of tax efficiency.

When it comes to selling investments it makes sense to sell your unwrapped shares first, before your SIPP, or ISA. 

I disagree.  With personal allowance available, it makes sense to use the pension for that chunk. (noting that there is no mention of when the DB pensions will start).

It looks like this scenario will be multi-wrapper draws rather than one at a time, along with bed & pension and bed & ISA  (and utilising spouse, if one)

Pipthecat

All that I have read suggests using the least tax efficient assets first 

Dividend and Personal Savings Allowances are just £1000 each this year (booo!).  Assuming you hold 50k of PBonds then you still have over £280k of unwrapped investments bringing in dividend and interest income.  As mentioned above would be good to max out your ISA allowance and top up your SIPP to the allowed maximum.

Sorry to hear you had a bad IFA experience.  I would take the transferring of the pensions off the table and maybe look for a good financial planner to help you map out a tax efficient retirement plan.

Brie

Just wondering if you have the DB amounts correct.  Is 58 the normal retirement age?  Is £25k & £4k pa the amount you get at 58 or NRA?  If your NRA is 60 for instance there will be a discounted amount for taking it 2 years early.  Likely you already know all this and I'm just stating the obvious.

Beyond that I'd say take the DBs and leave the other stuff til the stock market is in a better place.  (that's what I've done.)

Adpro2

DT2001 said:

What income are you looking for and are you expecting it to increase/decrease over time?

45k pa up to state pension age

Adpro2

El_Torro said:

Congratulations on retiring before you’re 60.

When it comes to selling investments it makes sense to sell your unwrapped shares first, before your SIPP, or ISA. 

Without knowing more about how you plan to spend your money it’s difficult to know what to suggest. 

How much do you need to live on every year? Are your two DB pensions paying out already? How much cash are you comfortable holding? You currently have a lot of money tied up in savings. 

DBs not yet started. Rental sale has temporarily increase savings to uncomfortable level. ISA & SIPP contributions have been maxed.

Adpro2

Albermarle said:

The DB transfer values are not really relevant, as it is difficult, expensive and not normally recommended to give up guaranteed income, especially now the transfer values are much lower then they were.

In your final year at work you may want to maximise contribution to your SIPP, to get maximum tax relief, and have the money in a sheltered tax environment, also max into ISA for same reason.

Once retired, the guidance is to make sure you at least use up your personal allowance. So take at least £12570 in taxable income .

Thank you, makes sense.

Adpro2

dunstonh said:

Reluctant to use an IFA after previous bad experiences of them.

All 15,000 of them?

All that I have read suggests using the least tax efficient assets first but Im not clear on why this is 

All tax wrappers can invest in the same investments.   The only difference is taxation and process.   So, it makes sense that you do it in an order of tax efficiency.

When it comes to selling investments it makes sense to sell your unwrapped shares first, before your SIPP, or ISA. 

I disagree.  With personal allowance available, it makes sense to use the pension for that chunk. (noting that there is no mention of when the DB pensions will start).

It looks like this scenario will be multi-wrapper draws rather than one at a time, along with bed & pension and bed & ISA  (and utilising spouse, if one)

Take your point on my bad luck with IFA's to date. Planned to put surplus saving into ISAs as tax year allow. Would an IFA be able to model a multi-wrapper scenario?