FA advice

ChillyCharly

Hi all...Newbie here so please be kind..
I have recently retired and I am looking to start taking my DC pension. My partner retired last year.

My partner is in receipt of a DB pension of just over £16k pa and received a lump sum of £50000 which he has got in ISA's. Lump sum was part of the pension (civil service).

Our position is:

Mortgage free
No debts
ISA's £52000 partner, £30k me
Cash savings £15,000
My DC pension is around £310,000.

I am 63 and my partner is 62.

To date this year I have earned £9000. I am no longer working.

I want to start drawing down my DC pension, just taking the remaining £3570 tax free allowance until the end of the financial year (monthly so £595 per month, then drawing down £12570 pa after that but £1047 monthly.

Once both me and my partner are 67, his DB, SP and my SP will be sufficient for us to live on.

I have spoken to my advisor who suggests I live off savings for a while until they are reduced therefore not accessing my pension yet.

Does this sound like good advice? 
I thought I should at least be taking my personal tax allowance? 

We have no dependants we wish/need to leave money to.

Archerychick

It is usually sensible to draw down your personal tax allowance, so you get those funds out without paying tax, before you start receiving your state pension. 

Marcon

ChillyCharly said:

Hi all...Newbie here so please be kind..
I have recently retired and I am looking to start taking my DC pension. My partner retired last year.

My partner is in receipt of a DB pension of just over £16k pa and received a lump sum of £50000 which he has got in ISA's. Lump sum was part of the pension (civil service).

Our position is:

Mortgage free
No debts
ISA's £52000 partner, £30k me
Cash savings £15,000
My DC pension is around £310,000.

I am 63 and my partner is 62.

To date this year I have earned £9000. I am no longer working.

I want to start drawing down my DC pension, just taking the remaining £3570 tax free allowance until the end of the financial year (monthly so £595 per month, then drawing down £12570 pa after that but £1047 monthly.

Once both me and my partner are 67, his DB, SP and my SP will be sufficient for us to live on.

I have spoken to my advisor who suggests I live off savings for a while until they are reduced therefore not accessing my pension yet.

Does this sound like good advice? 
I thought I should at least be taking my personal tax allowance? 

We have no dependants we wish/need to leave money to.

Your adviser is the one with all the facts. If you don't understand the logic of the advice you have paid for, go back and ask for an explanation which makes sense to you - and in particular question why that advice is apparently to not use your personal allowance in full.

Mark_d

It's certainly good advice to leave the pension untouched as long as possible.  I suspect it would also be advantageous to cash-in your ISA and add the funds to your pension at the time...unless you need to spend the £30k imminently.  Maybe a conversation to have with your advisor

Cobbler_tone

I thought I should at least be taking my personal tax allowance? 

I'd 100% agree with you, unless there is something missing that the FA knows about.

ChillyCharly

Cobbler_tone said:

I thought I should at least be taking my personal tax allowance? 

I'd 100% agree with you, unless there is something missing that the FA knows about.

No, there isn't anything missing. He just said not to start taking pension as we have a lot of cash savings. 

Cobbler_tone

ChillyCharly said:

Cobbler_tone said:

I thought I should at least be taking my personal tax allowance? 

I'd 100% agree with you, unless there is something missing that the FA knows about.

No, there isn't anything missing. He just said not to start taking pension as we have a lot of cash savings. 

Did they say why you shouldn't be using your annual income tax allowance? As you raised in the opening post as a potential path I am assuming he gave you the rationale, or that you asked the question.
Be interesting to know if he advised you on what to do with your DC pot, or whether you aren't at that stage yet.

If you are intending to draw it down then it makes sense to use your allowance. You could also buy an annuity to secure your income for life, with your savings as security. 

Anyway, all the best and sounds like you have a good foundation to enjoy your retirement.

MallyGirl

Mark_d said:

It's certainly good advice to leave the pension untouched as long as possible.  I suspect it would also be advantageous to cash-in your ISA and add the funds to your pension at the time...unless you need to spend the £30k imminently.  Maybe a conversation to have with your advisor

OP has only earned £9k so cannot put £30k in their pension 

Smudgeismydog

How much income do you need in addition to your partner’s DB income?
How much do you feel you need as a cash emergency fund?

I’m also of the opinion it’s probably worth utilising your personal allowance by drawing down taxable income from your DC pension. If this provides you with more income than you need as a household, then it can be added to your emergency fund.

You can also continue paying into your DC pension. How much have you paid in so far this year? You can make the most of your earned income this year, then the £2,880 (£3,600 gross), in following years. I think would be a more tax efficient way of reducing your cash holding 🤔

cloud_dog

ChillyCharly said:

Cobbler_tone said:

I thought I should at least be taking my personal tax allowance? 

I'd 100% agree with you, unless there is something missing that the FA knows about.

No, there isn't anything missing. He just said not to start taking pension as we have a lot of cash savings. 

I'll apologise in advance for making an assumption but, the cynical side of me thinks the FA would rather the 'chargeable' investments stay invested for as long as possible.

Unless there are inheritance considerations (* albeit bare in mind recent proposed future changes) or tax planning on the estate that Chilly hasn't shared I am struggling to think in terms of why this would be optimal.  Having said that, I see this 'focus' parroted quite frequently TBH.

ali_bear

You could take a small withdrawal on your DC pension to use up this year's allowance. Open a SIPP on Hargreaves Lansdown and do a partial transfer in, say 8k. Then ask HL to take it all in one go under the small pots rule. You get 2k of that as TFLS and will pay BR tax on the other 6k. 

You can take no more than 3 withdrawals under the small pots rule, each up to 10k.