65. Am I going about this correctly?

BookerDeWitt

Retired 5 years ago at 60. Since then I've been making UFPLS annual withdrawals from my private pension, got about £290K left in that and savings/investments amounting to around £450K.

This year I get my USS (Universities Superannuation Scheme) pension and, later, my state pension (£12K per year). I'm going to take the maximum tax-free lump sum from my USS pension (about £69K) then about £10K per year.

I'm single and live quite cheaply (but BofM&D for 1 adult child) but would like to move later this year and that will require some extra cash over what I would get for my current home.

Does it make sense to keep taking UFPLS withdrawals from my private pension to supplement my USS & state pensions or is there another way to access that money?

Thanks

Silvertabby

If you retired 5 years ago, have you checked your State pension forecast? Forget the oft mis-quoted "you need 35 years of NI in order to qualify for the full State pension" - that doesn't apply to you.

BookerDeWitt

https://forums.moneysavingexpert.com/discussion/comment/81900380#Comment_81900380

Yes, I was able to check online, thanks.

DRS1

Yes there are other ways of accessing the pension apart from UFPLS.

But do you actually need to do anything other than draw lower amounts of UFPLS?

With UFPLS 25% of each withdrawal is tax free and 75% is taxable.

Are you wondering if there is a way of getting more tax free and less taxable? Well you could do that for a while using FAD - take a tax free lump sum and leave the taxable bit in the pension but you'd just be storing the taxable bit up for later.

Albermarle

You already have £750K in risk based investments and some cash savings.

Normally in this case it would be sensible to get the maximum guaranteed income from the USS pension, rather than take the tax free lump sum. How much USS pension are you losing by taking the £69K lump sum?

BookerDeWitt

https://forums.moneysavingexpert.com/discussion/comment/81900556#Comment_81900556

If I took no lump sum I would get £14,279 per year. If I took £37K lump sump I'd get £12,387 per year.
I was leaning towards the maximum lump sum because I would like to move soon and need to get the maximum amount of cash.

DRS1

That looks like a commutation rate of 19.55:1. Better than some worse than others.

Do you have an investment builder in the USS? There is some fancy footwork you can do with the Investment Builder and tax free cash under the USS . But maybe you are already doing that as you mention a 69K lump sum and then a £37k lump sum.

Triumph13

How much 'extra cash' do you actually need? You have £450k sitting in savings/investments that you could presumably use if needed?

Another option is to draw the full remaining TFLS from your private pension in one go - that would be more than £70k. As for the other three quarters of it, almost all of that is going to be subject to tax on withdrawal (unless you die before 75) and so it makes very little difference when you take it, as long as you stay under the 40% tax band.

That would all seem to add up to no immediate real need for any lump sum from the USS pension. The question then becomes what is actually more useful for you, the extra cash or the extra guaranteed income? I personally would be leaning towards the extra income in your shoes.

BookerDeWitt

https://forums.moneysavingexpert.com/discussion/comment/81900756#Comment_81900756

You're right of course, I can use savings to cover the cost of moving. I suppose that, in the back of mind, I'm aware that the men in my family don't have a good record for longevity and so I'd might as well get the money sooner rather than later! I'll think on what you suggest…

katejo

https://forums.moneysavingexpert.com/discussion/comment/81900722#Comment_81900722

How do you work out the commutation factor from the lump sum and the predicted annual income? My final pension quote won't include the factor but I know the approx size of the potential lump sums and the approx annual income if I do or don't take a lump sum. Is there a formula which I can try to apply?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81900969#Comment_81900969

You divide the lump sum, by the reduction in pension that would happen if you took the lump sum, compared to not taking it.