Pension Pot Drawdown Or Not?

eric4395

MallyGirl said:

you have it right - you would be liable for basic rate tax on the amount above the £12,750 but you may be charged emergency tax to begin with.

Ok thanks why is it not just a simple case of taxing you at the 20% right away

MallyGirl

eric4395 said:

MallyGirl said:

you have it right - you would be liable for basic rate tax on the amount above the £12,750 but you may be charged emergency tax to begin with.

Ok thanks why is it not just a simple case of taxing you at the 20% right away

because they don't know what other income you are receiving - from annuities, other pensions, etc. You may also have transferred the marriage allowance bit. All they can go on is your tax code and if you aren't claiming anything beyond state pension, which is paid gross, then you don't have one and the first issued will be emergency one. If you take a very small first payment then the amount overpaid will be very small and then you can take the rest once your tax code has been issued.

Albermarle

eric4395 said:

Albermarle said:

eric4395 said:

dunstonh said:

1 is grade rated as cautious which I would have thought is appropriate in my situation . The only other one cautious is RL governed  portfolio 2.

Apologies, I was mixing it up with another GP number.  I dislike RL's numbering system.
However, it is still worth a look the picture holistically and not on a per product basis.

£300k cash
£50k in high risk equities
Penson of £525k with 61% equities.
That is £875,000 of which £370,250 is equities.
Does that mix of assets reflect the way you are going to spend the money?

Apologies you have lost me here 
What is the 300,000 cash got to do with my pension as they are savings
What is the 50k in high risk equities?
We have approx 50k in shares  in Tesco, Shell etc?
 What is the figure of £875,000 based on  ?
Are you saying 61% of £525,000 in equities is to high even although it's rated as a cautious fund,
Is there an alternative in RL  governed portfolio's 1- 9 ?
 And unsure what mix of assets reflect the way I am going to spend the money  means?.

You should look at your financial assets in the round and not individually as pension, savings etc.

Dunstonh did a very rough assessment of your asset allocation across the board.

So you have 
£300K in cash - risk of losing value to inflation
£50k in individual company shares, so high risk
Around £310 K in a diverse range of equities in your RL pension, so medium /high risk
Around £215 K in a diverse range of government and corporate bonds, and smaller amounts of other investments ( as part of the non equity part of the RL pension pot) so medium/low risk

So overall 41% equities, which is at the lower end of what is usually recommended.

In simple terms with that much in cash, you can afford to take a bit more risk by upping your % equities and still have a reasonably cautious portfolio but with more potential to grow long term. This will help to counter the inflation risk from holding a lot of cash.

Or to make it even simpler, just buying more equity with say £50K of the savings would rebalance the %'s.

The £300,000 is tied up in an easy access account and also  easy access &  fixed rate ISA 's  with availability to access this year, 2025 and 2026. I will access and use as need be and reinvest  what I don't need. The interest rates are all round 5% so for the time being I'm not losing out to much to inflation. That is true at the moment, but only since about 3 months ago. In recent years cash interest rates have been below inflation and probably will be again at some point.
  
The shares ie Tesco being  the main one worth about £40,000+ if we cashed them in have grew a fair bit over the years compared to when they first started( my wife's ) they also send you bonus shares every year etc so always adding to the total and can't complain about them, they have returned way more than was invested.
Shell/Royal Dutch /National grid /British gas shares were freebies if I remember correctly and are now worth a few thousand  £ so can't really complain about them either. Might start to look at selling them  and  reinvest in more isas, we haven't used our £20,000 for this year.
Interesting to read about the equity % figure and what you would maybe do as obviously at my age you are normally not wanting to take to much of a risk and stabilise what you have but if I am maybe not going to touch my pension then that changes things a bit. The point is that having a too low equity % is a long term risk in itself. Now 41% is not that low, but most recommendations are for a bit higher.

See comments in bold.