Pension. Isa dilemma

stephen160
stephen160 Posts: 71 Forumite
in Pensions, annuities & retirement planning
Pension/Isa advice. I am 56 , thinking of retiring next year. I have £500000 in stock and shares Isa and £500000 in a DC Sipp. When I retire I will have no further income.
My question, is it worth me transferring funds from my isa to my pension whilst I can get the tax relief, or leaving the funds in my isa for greater flexibility.
Many thanks in advance
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Comments

  • JoeCrystal
    JoeCrystal Posts: 3,011 Forumite
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    stephen160 wrote: »
    Pension/Isa advice. I am 56 , thinking of retiring next year. I have £500000 in stock and shares Isa and £500000 in a DC Sipp. When I retire I will have no further income.
    My question, is it worth me transferring funds from my isa to my pension whilst I can get the tax relief, or leaving the funds in my isa for greater flexibility.
    Many thanks in advance

    So you got an asset of £1 million pounds hmm? Why don't you find an IFA who will be able to advise you on the best course of actions? Well, read up on annual allowance and lifetime allowance for a starter.
  • ams25
    ams25 Posts: 260 Forumite
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    Are you a higher rate tax payer?
  • stephen160
    stephen160 Posts: 71 Forumite
    edited 5 February 2018 at 12:39PM
    Thanks JoeCrystal , but I have never used an IFA and I am unlikely to do so.
    I am unlikely to reach the lifetime allowance, another £30000 at the most into my pension then withdraw 25%, so I will be a way off 1 million.
    I am a basic rate tax payer, I have £15000 annual allowance left this year and was wondering was it worth me selling some isa funds to put into my pension
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Are you a high rate taxpayer?
    If so definitely max out your pension this year and backdate if possible to the max. 40% relief on way in, most probably none to pay on way out since you wont be paying tax until you get SP.

    If not, its still worth it. Say you put £32k in (assuming you earn £40k) which gets bumped up to £40k (minus whatever you've already put in).

    Over the next 10 years, not earning anything, you can draw that down from the SIPP without paying tax, so you've gained 20% without any inflexibility. Draw down from shares to supplement.
  • ams25
    ams25 Posts: 260 Forumite
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    I would put in the 15k. 20% tax relief and 25% tax free back.

    If you drawdown c.3% from your sipp after the tfls and use the tfls to build isa funds back up you can draw around 30k pa tax free across both (or more). Without nat insurance, income tax and pension contributions you will probably find your net income is the same or better than your employment earnings (at least under current rules)!!
  • JoeCrystal
    JoeCrystal Posts: 3,011 Forumite
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    edited 5 February 2018 at 1:47PM
    stephen160 wrote: »
    Thanks JoeCrystal , but I have never used an IFA and I am unlikely to do so.

    So how come you were able to transfer your DB pension from British Steel to Fidelity then? You can check with the IFA who did the transfer for you? :)
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,585 Ambassador
    First Anniversary First Post Name Dropper I've been Money Tipped!
    I would maximise your pension. You are still some way off the LTA. I assume you will be crystallising the pension and taking the 25% TFLS to live off initially?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • stephen160
    stephen160 Posts: 71 Forumite
    edited 5 February 2018 at 3:59PM
    JoeCrystal wrote: »
    So how come you were able to transfer your DB pension from British Steel to Fidelity then? You can check with the IFA who did the transfer for you? :)


    Yes I did use an IFA to do the transfer, but that was his only involvement, and i only used an IFa because it is the law of the land.

    Why check with the IFA , some excellent advice here.
  • atush
    atush Posts: 18,726 Forumite
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    I would whack in as much into the pension as allowed. Once you take your 25% TFLS you can start putting it back into the S&S isa
  • JoeCrystal
    JoeCrystal Posts: 3,011 Forumite
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    edited 5 February 2018 at 5:25PM
    stephen160 wrote: »
    Yes I did use an IFA to do the transfer, but that was his only involvement, and i only used an IFa because it is the law of the land.

    Why check with the IFA , some excellent advice here.

    That is a relief then that you did used an IFA for the transfer then. I was just worried for a moment that it was a scam or something else since you was saying that you never used an IFA. That's all. Considering you have a half of a million in S&S ISA, you are doing well anyway. :j
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