Pension tax advice

Twentytwothousand

Hi there

I had intended to retire at 64 but a series of illnesses amongst friends and just general pressure of life means I'm now going to retire in 14 months at the age of 61 and 9 months. I get my state pension at 67. My husand gets his state pension in 3.5 years and will get full state pension but has no other pensions at all (or interest in them, at all, ever!) 

I have pensions in various places - biggest chunk on the Transact platform managed by a Pension adviser (that's a SIPP), another in Scottish Widows (workplace), another in NOW pensions (again workplace) and finally a small pot that is in higher risk places and on Vanguard.     I have already crystalised £100k from a total pot of £650k.   So £550k uncrystalised, £100k already crystalised.   We need £40k a year.   I'll get full state pension (eventually)   

Do I tell everyone (pension providers) that I'm planning to retire next year and move them all to safest investments or just tell e.g. one and leave the rest where they are on the basis that they'll be draw downs and I won't have used all of Pot 1 until 2031.   At which point presumably I move onto Pot 2 and so forth.  Or do I just take 25% of each pot now so I actually need most of it to be in safer places as I will be spending it fairly soon?    Is this a job for a pension tax adviser?  Would there be any sense in leaving pensions with Scottish Widows and NOW or do they have to be kept separate from SIPPs for some reason?

obviously once I stop working, payments into my workplace pensions stop so am I better transferring those to very cheap platforms at that point?  Feels like a lot could go wrong.  I am not debt free, we have £80k of mortgage left to pay.   We also have a disabled adult son and I'm the main breadwinner so this pension will be supporting 3 adults to a greater or lesser extent (other son is fairly self sufficient)  I've asked ChatGPT and get a different answer every time.  I did meet with an IFA who said there was nothing he could add as it was already all fine but he wasn't a pensions tax adviser.

I also have about £10k in an ISA which will be about £20k at the point I retire

I find the tax side of fairly complex and know that getting it wrong could be a killer.   Many thanks if you can help me untangle this.   I can't post replies for some reason so to answer some questions in the original question:

Can you clarify what a 'pensions advisor' is ? Are you paying them a fee for financial advice?

He's the person who manages what funds the biggest of the pensions is invested in.    The Workplace pensions don't have much flexibility as to what they're invested in - I can just stipulate the degree of risk I can cope with in the Scottish Widows one and in the NOW pension it's just predicated on when I'm planning to draw it down. So not sure if I should say "in 6 years time" working on the basis that I'll be using up other pots first if I can find a tax efficient way of doing that. 

It is a bit unusual to pay an advisor to manage just one pension, and manage the others yourself.

He's paid a percentage of that one pot.  

I did meet with an IFA who said there was nothing he could add as it was already all fine but he wasn't a pensions tax adviser.
I do not understand this. Pensions are the bread and butter of an IFA's work and that includes any tax issues, so it is a strange comment for an IFA to make.

I was a bit surprised - he was recommended by a friend but not at all keen to get involved in the tax side. Nor is the one I'm paying to invest the money.   So my experience with paid advisors is not that robust really - one just manages investment and the other was more "these are all fine, nothing to worry about.  When the time comes talk to a tax expert".   

What should I look for in an advisor?   I've had patchy advice everytime I've had an FA - one advised me to lie about my mental health as it would put up my insurance premiums. I had to tell him that I was buying insurance so I'd be covered in the event of needing to claim, not simply to pay money out of my account every month.   how do I find a good advisor who can cover all of this?  Everyone I've spoken to has been regulated  and had the requisite logos on their website.  

DRS1

Presumably there is a reason you aren't talking to the Pension Adviser you mention in your second paragraph?

If you read around on here there are plenty of threads on how people manage their drawdown from pensions (or indeed whether to buy an annuity instead).

You don't really need a tax adviser more a financial planner.

Albermarle

Twentytwothousand said:

Hi there

I had intended to retire at 64 but a series of illnesses amongst friends and just general pressure of life means I'm now going to retire in 14 months at the age of 61 and 9 months. I get my state pension at 67.

I have pensions in various places - biggest chunk on the Transact platform managed by a Pension adviser (that's a SIPP), another in Scottish Widows (workplace), another in NOW pensions (again workplace) and finally a small pot that is in higher risk places and on Vanguard.     I have already crystalised £100k from a total pot of £650k.   So £550k uncrystalised, £100k already crystalised.   We need £40k a year.   I'll get full state pension (eventually)   
Can you clarify what a 'pensions advisor' is ? Are you paying them a fee for financial advice?
It is a bit unusual to pay an advisor to manage just one pension, and manage the others yourself.

Do I tell everyone (pension providers) that I'm planning to retire next year no need to inform them that you have retiredand move them all to safest investments or just tell e.g. one and leave the rest where they are on the basis that they'll be draw downs and I won't have used all of Pot 1 until 2031.   At which point presumably I move onto Pot 2 and so forth.  Or do I just take 25% of each pot now so I actually need most of it to be in safer places as I will be spending it fairly soon?    Is this a job for a pension tax adviser?  Would there be any sense in leaving pensions with Scottish Widows and NOW or do they have to be kept separate from SIPPs for some reason? They are all DC ( defined contribution) pensions so normally no problem to merge them unless they have some special benefits.
As your pensions drawdown could last for decades, it is best to keep invested at least at a medium risk level. However for money you will be looking to withdraw in the next couple of years or so, you would be better in cash or cash like investments.

obviously once I stop working, payments into my workplace pensions stop so am I better transferring those to very cheap platforms at that point?  Feels like a lot could go wrong.  Low fees are an advantage but the main thing is to make sure they are invested appropriately. I am not debt free, we have £80k of mortgage left to pay.   We also have a disabled adult son and I'm the main breadwinner so this pension will be supporting 3 adults to a greater or lesser extent (other son is fairly self sufficient)  I've asked ChatGPT and get a different answer every time.  I did meet with an IFA who said there was nothing he could add as it was already all fine but he wasn't a pensions tax adviser.
I do not understand this. Pensions are the bread and butter of an IFA's work and that includes any tax issues, so it is a strange comment for an IFA to make.

I also have about £10k in an ISA which will be about £20k at the point I retire

I find the tax side of fairly complex and know that getting it wrong could be a killer.   Many thanks if you can help me untangle this. 

Quite a lot of questions and I have tried to answer some in bold, but also queried a couple of points.
On the tax side, you should plan to take at least £12570 of taxable income each tax year before your state pension arrive. This will use up your personal tax allowance. If you do not use it you will lose it.
So do not just take out the tax free cash. It would be better to take a mix of tax free and taxable income each year.

QrizB

Twentytwothousand said:

I had intended to retire at 64 ... I'm now going to retire at the age of 61 and 9 months. I get my state pension at 67. I have pensions in various places

We need £40k a year. 

I'll get full state pension (eventually)   

There's a lot of "I" in you post but a couple of "we"s.

Who is "we"? You mention three adults; are you married (or civil partners) with someone or is "we" just you and your dependent son?

If you are married etc. how old is your spouse, when do they expect to retire and what pensions do they have?

Twentytwothousand said:

So £550k uncrystalised, £100k already crystalised.   We need £40k a year.   I'll get full state pension (eventually)

Looking at your pensions only, once you get to State Pension Age (67?) you'll have £12k pa from your SP. You'll need another £28k pa. To get an index-linked £28k pa you'll need to spend £520k on an annuity (or £700k to draw down at 4%). That leaves you with £120k from your current £650k free.

£120k is £40k pa for three years, so on the face of it you can't afford to retire before age 64.

IF you have a spouse of the same age, and IF they also expect a full SP, things look rosier. You'll have £24k of combined SP from age 67, meaning you only need £16k pa of other income - £300k of annuity (or £400k of 4% drawdown). That would leave £350k, enough for £40k pa for almost nine years, letting you retire from age ~58 (ie. immediately).

poseidon1

Just to add to @QrizB's questions, I note the following :

You are married but indicate your husband has never had an interest in private pension provision so he is only in line for the state pension in due course.

However, bearing in mind your own impressive rosta of private pensions, are we to understand you alone will be doing most of the heavy lifting to achieve the £40k annual (gross?) income when you retire or assuming he is currently working will your husband be making a meaningful contribution to the £40k needed until his state pension comes on stream?

What I am saying, and as intimated by @QrizB, we are only hearing what you feel you personally need to do to achieve the £40k target, but surely there is another breadwinner's income to take into account, that would change the emphasis on what your own Sipp and pensions need to contribute prior to you hitting state pension age. So some information on husband's income sources would be helpful.

With a disabled son to support between you, your £40k target ( before tax?) doesn't sound quite sufficient.

Marcon

Twentytwothousand said:

I find the tax side of fairly complex and know that getting it wrong could be a killer.   

If you have pension schemes in drawdown, so that you can manage when you take cash from them, I think that's a major overstatement (a comment intended to reassure, not criticise!). You could be worrying needlessly about the impact of not optimising the tax position, but that's a very long way from disaster.

A free appointment with PensionWise might be no bad thing: https://maps.org.uk/en/media-centre/financial-wellbeing-blog/2025/reflecting-on-ten-years-of-pension-wise

Albermarle

With a disabled son to support between you, 

You would normally expect a disabled adult to be receiving some level of benefits, so presumably that could help.

Somehow the OP has answered some of my questions by amending the original post. Not quite sure how they managed that, but I will requote it following this post.

Albermarle

Twentytwothousand said:

Hi there

I had intended to retire at 64 but a series of illnesses amongst friends and just general pressure of life means I'm now going to retire in 14 months at the age of 61 and 9 months. I get my state pension at 67. My husand gets his state pension in 3.5 years and will get full state pension but has no other pensions at all (or interest in them, at all, ever!) 

I have pensions in various places - biggest chunk on the Transact platform managed by a Pension adviser (that's a SIPP), another in Scottish Widows (workplace), another in NOW pensions (again workplace) and finally a small pot that is in higher risk places and on Vanguard.     I have already crystalised £100k from a total pot of £650k.   So £550k uncrystalised, £100k already crystalised.   We need £40k a year.   I'll get full state pension (eventually)   

Do I tell everyone (pension providers) that I'm planning to retire next year and move them all to safest investments or just tell e.g. one and leave the rest where they are on the basis that they'll be draw downs and I won't have used all of Pot 1 until 2031.   At which point presumably I move onto Pot 2 and so forth.  Or do I just take 25% of each pot now so I actually need most of it to be in safer places as I will be spending it fairly soon?    Is this a job for a pension tax adviser?  Would there be any sense in leaving pensions with Scottish Widows and NOW or do they have to be kept separate from SIPPs for some reason?

obviously once I stop working, payments into my workplace pensions stop so am I better transferring those to very cheap platforms at that point?  Feels like a lot could go wrong.  I am not debt free, we have £80k of mortgage left to pay.   We also have a disabled adult son and I'm the main breadwinner so this pension will be supporting 3 adults to a greater or lesser extent (other son is fairly self sufficient)  I've asked ChatGPT and get a different answer every time.  I did meet with an IFA who said there was nothing he could add as it was already all fine but he wasn't a pensions tax adviser.

I also have about £10k in an ISA which will be about £20k at the point I retire

I find the tax side of fairly complex and know that getting it wrong could be a killer.   Many thanks if you can help me untangle this.   I can't post replies for some reason so to answer some questions in the original question:

Can you clarify what a 'pensions advisor' is ? Are you paying them a fee for financial advice?

He's the person who manages what funds the biggest of the pensions is invested in.    The Workplace pensions don't have much flexibility as to what they're invested in - I can just stipulate the degree of risk I can cope with in the Scottish Widows one and in the NOW pension it's just predicated on when I'm planning to draw it down. So not sure if I should say "in 6 years time" working on the basis that I'll be using up other pots first if I can find a tax efficient way of doing that. 

It is a bit unusual to pay an advisor to manage just one pension, and manage the others yourself.

He's paid a percentage of that one pot.  

I did meet with an IFA who said there was nothing he could add as it was already all fine but he wasn't a pensions tax adviser.
I do not understand this. Pensions are the bread and butter of an IFA's work and that includes any tax issues, so it is a strange comment for an IFA to make.

I was a bit surprised - he was recommended by a friend but not at all keen to get involved in the tax side. Nor is the one I'm paying to invest the money.   So my experience with paid advisors is not that robust really - one just manages investment and the other was more "these are all fine, nothing to worry about.  When the time comes talk to a tax expert".   

What should I look for in an advisor?   I've had patchy advice everytime I've had an FA - one advised me to lie about my mental health as it would put up my insurance premiums. I had to tell him that I was buying insurance so I'd be covered in the event of needing to claim, not simply to pay money out of my account every month.   how do I find a good advisor who can cover all of this?  Everyone I've spoken to has been regulated  and had the requisite logos on their website.  

Any standard IFA should be able to handle your pensions, withdrawals, tax etc without any issues, except you would need to pay them of course. They would probably want to transfer all your pensions into one.
There are LOTS of threads about IFAs on the forum, but the usual guidance is to look for a small local firm with maybe 3 or 4 advisors.

dunstonh

I did meet with an IFA who said there was nothing he could add as it was already all fine but he wasn't a pensions tax adviser.

IFAs are not accountants but IFAs do handle tax wrappers and tax calculations on those wrappers.   So, yes, he was a pensions tax adviser as it is part of the IFA remit.   However, if that was all you wanted advice on, then an IFA is unlikely to offer services as its a side part to their main role.   An accountant would be more appropriate if that was the only thing.

I was a bit surprised - he was recommended by a friend but not at all keen to get involved in the tax side. Nor is the one I'm paying to invest the money.   So my experience with paid advisors is not that robust really - one just manages investment and the other was more "these are all fine, nothing to worry about.  When the time comes talk to a tax expert".   

Was he an FA rather than an IFA?   A  lot of people misuse the term IFA.  Research has found over half of people  with an FA or have seen an FA think that they are an IFA.

Additionally, if you are not formally paying for advice, then you are not getting advice.   You are getting a discussion, and if you are trying to get a freebie, then the IFA may just find an excuse to not proceed.

Everyone I've spoken to has been regulated  and had the requisite logos on their website.  

What logos?  Many IFAs don't have a website.   And there is no requisite logos.   Are you perhaps looking at National/Regional firms and FA salesforces?    A number of these dominate the search engines (unless you change their settings in the search), and many of them appear in every postcode, even though they have no presence in your area.   If, when speaking to you on the phone or messaging it appears that you are not likely to be profitable to them, they are not going to drive hundreds of miles to see you.

Silvertabby

Have you taken into account how your husband and son would manage should you predecease them?  Because life happens.

Marcon

Silvertabby said:

Have you taken into account how your husband and son would manage should you predecease them?  Because life happens.

Sadly so does death...