Ill health retirement

lunalg

Thanks for responses. My thoughts would be we would put as much in ISAs annually whilst we can (if ISA allowance change) and hold in premium bonds to shelter from tax free 

Baldytyke88

QrizB said:

Baldytyke88 said:

lunalg said:

Not sure the options said annual pension figure plus the tax free lump sum. 

The 25% tax free is built into both pension options.

Baldytyke is giving poor advice.

From what you've written, the tax-free lump sums will be as stated. There's no "25%" to worry about.

Can you explain why my advice is poor, 25% of the pension is free.

DRS1

Baldytyke88 said:

QrizB said:

Baldytyke88 said:

lunalg said:

Not sure the options said annual pension figure plus the tax free lump sum. 

The 25% tax free is built into both pension options.

Baldytyke is giving poor advice.

From what you've written, the tax-free lump sums will be as stated. There's no "25%" to worry about.

Can you explain why my advice is poor, 25% of the pension is free.

You are thinking of a DC scheme (which to be fair is what the OP said it was) but the figures suggest it is a DB scheme.  The lump sums would be tax free whether the OP's husband took the higher or the lower amount.  The higher amount would get very close to the LSA and restrict any tax free lump sum he might be able to take from another pension if he has one.

DRS1

lunalg said:

Thanks for responses. My thoughts would be we would put as much in ISAs annually whilst we can (if ISA allowance change) and hold in premium bonds to shelter from tax free 

You might want to make some other plans as well.  If your husband takes the higher lump sum it will take six and a bit years for you both to get that into your ISAs.

You haven't answered the question on his likely longevity.  Baldly if his doctors think he won't survive 20 years then he should take the higher lump sum.

lunalg

His condition is severely life limiting not terminal. Yes I understand about ISAs are there any other tax efficient ways to invest / save lump sum 

MallyGirl

Once you have filled ISAs and Premium Bonds then anything else mainstream will generate taxable interest/income or capital gains tax. I would imagine you want to keep it fairly straightforward to manage so that you can focus on the important things 

Marcon

MallyGirl said:

Once you have filled ISAs and Premium Bonds then anything else mainstream will generate taxable interest/income or capital gains tax. I would imagine you want to keep it fairly straightforward to manage so that you can focus on the important things 

^^^^This is an excellent observation. Simplicity is often a far greater benefit than saving a bit of tax, especially when dealing with illness.