USS Flexible retirement confusion

PJM_62

I wish I'd known this years before I found out.
It's a fantasticly tax efficient way of saving for the future.

Nick_Dr1

PJM_62 said:

Barralad77 said:

Re. The amount of money you can take tax-free (I.e.. the question over where the figure of 6.667 comes from).

Take some hypothetical values:

Annuity = £20,000

3 x LS = £60,000

Investment Builder (IB) = 140,000

(Note LS + IB = £200,000)

You can take 25% of the total value of the pension (the Life Time Allowance - LTA - figure) tax-free.

In USS the LTA is calculated as (20 x annuity) plus anything else (e.g., the LS and IB pot).

Even simpler is to multiply the annuity by 23 (and so catch the 3x LS in a single calculation)

So, for the above, the LTA = (23 x 20,000) + 140,000 = 600,000

With no reverse commutation but maximising the amount you can take tax-free simply multiply the annuity by 6.667 (to give the value of what we’ll refer to as the TFLS):

TFLS = £20,000 x 6.667 = £133,000

Remaining IB > £67,000

(Note: TFLS + IB still = £200,000)

25% of the remaining IB money is also tax-free (in this case, approx. £17,000)

Total tax-free cash is £150,000 (£133,000 + £17,000)

Remember that LTA value is £600,000

25% of £600,000 is £150,000

I think that’s correct, but if I’ve gone wrong then please correct me (as I’ll have to do my numbers all over again!)

Nicely explained 😀👍

Yes, thank you for that.
My question then would be, can you do it twice?
ie flex once, take 50% pension and 50% max TFLS (including part of the IB part), and then the next year retire fully and take the remaining 50% (and hopefully any growth) and the remaining 50% TFLS without the second cash part becoming a 75/25 drawdown.
All assuming the various lifetime limits haven't been exceeded.

PJM_62

Nick_Dr1 said:

PJM_62 said:

Barralad77 said:

Re. The amount of money you can take tax-free (I.e.. the question over where the figure of 6.667 comes from).

Take some hypothetical values:

Annuity = £20,000

3 x LS = £60,000

Investment Builder (IB) = 140,000

(Note LS + IB = £200,000)

You can take 25% of the total value of the pension (the Life Time Allowance - LTA - figure) tax-free.

In USS the LTA is calculated as (20 x annuity) plus anything else (e.g., the LS and IB pot).

Even simpler is to multiply the annuity by 23 (and so catch the 3x LS in a single calculation)

So, for the above, the LTA = (23 x 20,000) + 140,000 = 600,000

With no reverse commutation but maximising the amount you can take tax-free simply multiply the annuity by 6.667 (to give the value of what we’ll refer to as the TFLS):

TFLS = £20,000 x 6.667 = £133,000

Remaining IB > £67,000

(Note: TFLS + IB still = £200,000)

25% of the remaining IB money is also tax-free (in this case, approx. £17,000)

Total tax-free cash is £150,000 (£133,000 + £17,000)

Remember that LTA value is £600,000

25% of £600,000 is £150,000

I think that’s correct, but if I’ve gone wrong then please correct me (as I’ll have to do my numbers all over again!)

Nicely explained 😀👍

Yes, thank you for that.
My question then would be, can you do it twice?
ie flex once, take 50% pension and 50% max TFLS (including part of the IB part), and then the next year retire fully and take the remaining 50% (and hopefully any growth) and the remaining 50% TFLS without the second cash part becoming a 75/25 drawdown.
All assuming the various lifetime limits haven't been exceeded.

youre asking about , for each flex, taking 50% of IB pot as TFLS.  That depends on how much is in there I guess.  If you have £10 million in there .. thatll be a no 

Max combined TFLS = 3x Pension   +  3.66 x Pension (taken from IB)
But for the IB part its 'upto' 3.66 x Pension.
So you can take what you want / need , so long as you dont go over the 3.66 x P  (or over the lifetime limits).