Cash or DC pension First?

magd36

ali_bear said:

Long term the DC fund will gain from real growth. If that is a cash ISA its value will be eroded over time. 

I realise that but want to balance stock market risk during my retirement. Don’t won’t to totally rely on having to take DC in a downturn which could take a few years to recover 

magd36

leosayer said:

The most important thing is how your savings are invested.

Draw too much from your DC now and you won't have growth that you might need to beat inflation and sustain you over the next 10-20 years.

Draw too much from your cash ISA and your DC investment could experience a market drop that will reduce the amount you can take from DC.

More details needed. 

What details do you want to know?

magd36

Albermarle said:

If you are happy with the current 2:1 mix, then you will have to withdraw from both to keep the ratio steady.

Appreciate that as it might suit my preference of spreading risk.

magd36

tetrarch said:

Dependent on your portfolio size and tax position, i may make more sense to switch the portfolios over, given your investment mix

The investment growth within your ISA is (and hopefully always remains) tax-free. withdrawals from your DC pension are taxable

Therefore it makes sense to keep your cash component (or equivalent) within your DC pension and move your equity investments within your ISA, thus avoidding a tax charge on your investment growth.

Regards

Tet

I understand but don’t seem to have any funds that are largely cash based in my pension. It’s food for thought 

magd36

DRS1 said:

Have you already used the tax free lump sum from the pension?

Do you have any objection to paying a bit of basic rate tax on the pension withdrawals?

If you don't draw on the pension what will happen to it?  Is there someone else you want to leave it to?

I plan to use the max tax free lump sum to create the 2:1 mix and spread the risk.

No issue with paying basic rate tax for an overall benefit.

If there’s pension left once I’ve crocked it, it will go to my wife or else child.

leosayer

magd36 said:

leosayer said:

The most important thing is how your savings are invested.

Draw too much from your DC now and you won't have growth that you might need to beat inflation and sustain you over the next 10-20 years.

Draw too much from your cash ISA and your DC investment could experience a market drop that will reduce the amount you can take from DC.

More details needed. 

What details do you want to know?

What is your DC pension invested in?

What is the value of your cash ISAs and your DC pension?

How much income do you need per year?

magd36

Triumph13 

Nope.  It makes no difference at all - as long as you adjust your asset allocation in the first place to reflect the tax position.  For a 20% taxpayer £100k in a crystallised pension is exactly equivalent to £80k in an ISA in the same asset class, no matter what the subsequent growth.

I plan to have the ISA’s 80/30 split between Cash and S&S to balance stock market risk.