Overwhelmed by pension options any advice please?

Dazed_and_C0nfused

Cobbler_tone said:

bjorn_toby_wilde said:

Zoho said:

4)     But, for one or two years, I would like to contribute £2,500 to the pension and take advantage of the governments £750 top-up scheme.

I think you may mean £2880 to get £3600.  It’s not really a £750 top up scheme. £3600 gross is the most you can contribute if you have no other earned income. The £2880 is £3600 less 20% tax so the “top up” is £720.

This is something I will face soon and a new world for me. If the only DC product you have is for drawdown, can you generally use this product to pay in £2,880 and get the tax relief added automatically?

Yes, but you could end up with two separate pots within the same pension.  One for crystallised funds and one for uncrystallised.

bjorn_toby_wilde

Dazed_and_C0nfused said:

Cobbler_tone said:

bjorn_toby_wilde said:

Zoho said:

4)     But, for one or two years, I would like to contribute £2,500 to the pension and take advantage of the governments £750 top-up scheme.

I think you may mean £2880 to get £3600.  It’s not really a £750 top up scheme. £3600 gross is the most you can contribute if you have no other earned income. The £2880 is £3600 less 20% tax so the “top up” is £720.

This is something I will face soon and a new world for me. If the only DC product you have is for drawdown, can you generally use this product to pay in £2,880 and get the tax relief added automatically?

Yes, but you could end up with two separate pots within the same pension.  One for crystallised funds and one for uncrystallised.

To add, I believe providers differ in how they handle it. Some have a notional split and others have separate pots.

I haven’t drawn any yet so my annual £2880 just goes into the same pot.

Cobbler_tone

Dazed_and_C0nfused said:

Cobbler_tone said:

bjorn_toby_wilde said:

Zoho said:

4)     But, for one or two years, I would like to contribute £2,500 to the pension and take advantage of the governments £750 top-up scheme.

I think you may mean £2880 to get £3600.  It’s not really a £750 top up scheme. £3600 gross is the most you can contribute if you have no other earned income. The £2880 is £3600 less 20% tax so the “top up” is £720.

This is something I will face soon and a new world for me. If the only DC product you have is for drawdown, can you generally use this product to pay in £2,880 and get the tax relief added automatically?

Yes, but you could end up with two separate pots within the same pension.  One for crystallised funds and one for uncrystallised.

Would that be dependant on whether you had already taken the 25% TFLS, or using UFPLS drawdown?
I'll probably do it if it can be done within the same product. I note that it can cost £75 per withdrawal, in which case I would do one per year.
Edit: having read several old threads though, the benefit of UFPLS vs Flex-access drawdown (post TFLS) seems to be negligible if you start firmly in the 20% tax bracket.

QrizB

Cobbler_tone said:

Edit: having read several old threads though, the benefit of UFPLS vs Flex-access drawdown (post TFLS) seems to be negligible if you start firmly in the 20% tax bracket.

Even for a 20% taxpayer, UFPLS means:

- you don't have to manage a part-crystallised pension 

- you don't end up spending all your TFLS at the start of retirement and then regretting it later.

Cobbler_tone

QrizB said:

Cobbler_tone said:

Edit: having read several old threads though, the benefit of UFPLS vs Flex-access drawdown (post TFLS) seems to be negligible if you start firmly in the 20% tax bracket.

- you don't end up spending all your TFLS at the start of retirement and then regretting it later.

I might want to, as opposed to reducing my DB pension. I'll take a lump sum from one or the other. 

LHW99

Cobbler_tone said:

QrizB said:

Cobbler_tone said:

Edit: having read several old threads though, the benefit of UFPLS vs Flex-access drawdown (post TFLS) seems to be negligible if you start firmly in the 20% tax bracket.

- you don't end up spending all your TFLS at the start of retirement and then regretting it later.

I might want to, as opposed to reducing my DB pension. I'll take a lump sum from one or the other. 

Taking a DC TFLS in order to delay taking a DB until (closer) to NRA could work well.

Be aware that you often cannot take the lump sum from a DB without putting the whole pension into payment.

Cobbler_tone

LHW99 said:

Cobbler_tone said:

QrizB said:

Cobbler_tone said:

Edit: having read several old threads though, the benefit of UFPLS vs Flex-access drawdown (post TFLS) seems to be negligible if you start firmly in the 20% tax bracket.

- you don't end up spending all your TFLS at the start of retirement and then regretting it later.

I might want to, as opposed to reducing my DB pension. I'll take a lump sum from one or the other. 

Taking a DC TFLS in order to delay taking a DB until (closer) to NRA could work well.

Be aware that you often cannot take the lump sum from a DB without putting the whole pension into payment.

I have my strategy to do both. Take the DB with appropriate early reduction (no or perhaps a small lump sum - giving lifetime security from early retirement to grave) with increased bridge to state pension, whilst drawing down the DC for fun/contingency capital. I'm comfortable with my approach and modelled it to death.
My interest is the efficiency of drawing down the DC (of which I am currently upskilling on, particular the different providers, flexibility, user platform and fees), whilst remaining under the 40% bracket. The first year will be messy due to a July finish but it should be straight forward after that with the DB of around £30k my sole income. I know my own DB scheme inside out.

Anyway, I don't want to take over someone else's thread. My own is elsewhere. It becomes more and more apparent that many suggestions are general, whilst everyone's situation is entirely personal to them.

Zoho

Thank you very much for your replies, it has helped me to focus. DRS1 links were also useful. I will use a SIPP as it seems more straight forward than risking a FA, plus I researched the funds I prefer and will open a cash reserve within the SIPP to make the draw down. 

dunstonh

 I will use a SIPP as it seems more straight forward than risking a FA

An annuity is low risk (an RPI annuity is effectively risk free).    Using a SIPP is higher risk.   Not sure what "FA" risk is.

Zoho

True, a SIPP is more risk, but I am looking to spread the risk across funds with good performance, although perhaps I could also look at a RPI annuity for the cash part. Thanks for ideas. FA is a Financial advisor.