Early retirement on savings, with or without a pension?

Albermarle

NorthernGuy said:

Thanks for the above answers, very informative.  As I'll get a full state pension eventually, you are saying my private pensions will be clobbered for tax after you take the tax free lump, the rest is just treated like employment income, so no special clobbering just paying normal income tax. that state one uses up almost all my tax allowance.  So getting some pension out now, untaxed, is a better deal over all.  Ideas of drawing out money purchase pension now and reinvesting in stocks & shares ISA sound complex, is the idea that pension growth is now taxable, unlike ISAs? The Money Purchase ( an old expression, now normally referred to as  Defined Contribution ( DC ) pension) will be invested in the financial markets. So to withdraw some of it and put it in a S&S ISA with investments in the financial markets is relatively easy if you have some understanding of how your DC pension is invested/ financial markets.

In terms of which of the two pensions I draw, would it be wise to draw the deferred Final Salary one, gaining extra protection that way against corporate collapse as those drawing the pension are a priority?  And leave the money purchase one to grow? Difficult to say, but for sure the DC pension might go down rather than up, over the shorter term anyway, depending on the financial markets.

As an aside, I have an old AVC fund worth £20k, not growing very fast, and when I enquired no special terms were offered, like being able to draw that as a cash lump sum instead of the one in the Final Salary or Money Purchase schemes.  Would I be better off transferring that into the MP scheme?

The AVC fund will be invested in the markets, so will go up and down, as will your DC scheme, but hopefully up overall.
It depends how each pension is invested, whether it is an AVC fund or your main DC pension. 

NorthernGuy

Marcon said:

NorthernGuy said:

In terms of which of the two pensions I draw, would it be wise to draw the deferred Final Salary one, gaining extra protection that way against corporate collapse as those drawing the pension are a priority?  

If the employer suffers an insolvency event and the scheme is accepted into the Pension Protection Fund, you wouldn't get 'extra protection' if you have taken your pension early and not yet reached the scheme's normal retirement age.

NorthernGuy said:

As an aside, I have an old AVC fund worth £20k, not growing very fast, and when I enquired no special terms were offered, like being able to draw that as a cash lump sum instead of the one in the Final Salary or Money Purchase schemes.  Would I be better off transferring that into the MP scheme?

No means of knowing based on the information you've given (ie zero!). Surely this is one for discussion with the pension adviser, who actually has hard facts on which to comment?

Ok thanks, I'd been told by a workmate that those drawing a Final Pay pension were somehow better protected,  but obviously not the case.  Regards the £20k AVC fund, I am indeed discussing this with the pension man, it's just long delays occur between his visits (6+ months since his last one) and I was trying to get ahead of the game for whenever he next comes and can see me too. 

When he looked at that old AVC fund, it was growing by a mere 2.7% which didn't impress him, and when we asked for any special terms as described earlier, none were available.  Just the standard terms for drawing as an annuity, perhaps taking the default tax-free lump sum, or else transferring all elsewhere.  Does that give you enough info to comment?

badmemory

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

Marcon

badmemory said:

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

If you can't get another appointment with the current pension adviser in the near future, it might be worth seeing if you can arrange your own appointment with another IFA? You've got a lot of questions (good for you for asking them!) and are clearly in uncharted territory, but people here simply haven't got all the information they need to answer on anything other than a speculative basis when it comes to 'what's best for me....'.

NorthernGuy

badmemory said:

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

Yes this had crossed my mind too, as it might only offer a £1k annual annuity and not exceed my tax allowance.  Otherwise if chucked into the bulk money purchase pension, I could draw it all as a tax-free cash lump sum later as under 25% of the total fund.

Marcon said:

badmemory said:

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

If you can't get another appointment with the current pension adviser in the near future, it might be worth seeing if you can arrange your own appointment with another IFA? You've got a lot of questions (good for you for asking them!) and are clearly in uncharted territory, but people here simply haven't got all the information they need to answer on anything other than a speculative basis when it comes to 'what's best for me....'.

He's good when I've seem him, but hasn't responded to all my emails.  I'm wondering if that's because he's not supposed to give advice, whilst sort of gently doing so in private meetings.  He may be more coy about replying in email suggesting what would be the best option?

Albermarle

NorthernGuy said:

badmemory said:

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

Yes this had crossed my mind too, as it might only offer a £1k annual annuity and not exceed my tax allowance.  Otherwise if chucked into the bulk money purchase pension, I could draw it all as a tax-free cash lump sum later as under 25% of the total fund.

Marcon said:

badmemory said:

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

If you can't get another appointment with the current pension adviser in the near future, it might be worth seeing if you can arrange your own appointment with another IFA? You've got a lot of questions (good for you for asking them!) and are clearly in uncharted territory, but people here simply haven't got all the information they need to answer on anything other than a speculative basis when it comes to 'what's best for me....'.

He's good when I've seem him, but hasn't responded to all my emails.  I'm wondering if that's because he's not supposed to give advice, whilst sort of gently doing so in private meetings.  He may be more coy about replying in email suggesting what would be the best option?

Personal Financial Advice is a specific term, and can only be given by a qualified financial advisor. As they are legally liable for any bad advice, they will only give advice after a long consultation with the client where all financial and personal details have to be in the open. Plus of course there are significant charges involved.
If you have not been through this process with the current pension advisor, then all you are really getting is general guidance ( same as you get on this forum) . If this is the case then he will be reluctant to put in writing anything that could be construed as personal financial advice.

NorthernGuy

Albermarle said:

NorthernGuy said:

badmemory said:

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

Yes this had crossed my mind too, as it might only offer a £1k annual annuity and not exceed my tax allowance.  Otherwise if chucked into the bulk money purchase pension, I could draw it all as a tax-free cash lump sum later as under 25% of the total fund.

Marcon said:

badmemory said:

Just wondering if (despite only 2.7%) it would be worth putting in whatever possible to the personal pension to get the tax uplift.  Although I can see it might change the way you would need to withdraw.

If you can't get another appointment with the current pension adviser in the near future, it might be worth seeing if you can arrange your own appointment with another IFA? You've got a lot of questions (good for you for asking them!) and are clearly in uncharted territory, but people here simply haven't got all the information they need to answer on anything other than a speculative basis when it comes to 'what's best for me....'.

He's good when I've seem him, but hasn't responded to all my emails.  I'm wondering if that's because he's not supposed to give advice, whilst sort of gently doing so in private meetings.  He may be more coy about replying in email suggesting what would be the best option?

Personal Financial Advice is a specific term, and can only be given by a qualified financial advisor. As they are legally liable for any bad advice, they will only give advice after a long consultation with the client where all financial and personal details have to be in the open. Plus of course there are significant charges involved.
If you have not been through this process with the current pension advisor, then all you are really getting is general guidance ( same as you get on this forum) . If this is the case then he will be reluctant to put in writing anything that could be construed as personal financial advice.

Well you confirm exactly what I suggested.  It's one thing to quietly steer someone in a direction behind closed doors, quite another in an email.  I'll have to await our next meeting or else pay for some advice as others have suggested.