22-01-2013, 01:51 PM
1
Pension Options
OK guys can I have your thoughts on this please. As you know I will be retiring in a few months time. I am 6 years off drawing the state pension under the current legislation so will be managing on 4 employer pension funds of varying amounts the one with my current employer being by far the biggest. I will be drawing the 25% tax free lump sum from this fund but am undecided whether to draw lump sums from the other 3 schemes or not. If I take all the lump sums I will obviously have a much larger sum in the bank tax free which I could use to top up my monthly pension amounts. Or would it be better not to take these and have a higher guaranteed amount paid each month albeit it subject to tax.I have the services of an IFA paid for by my company and will ask him as well for advice but would be very interested to get your thoughts as well as many of you will have gone down this route already.
Thanks
22-01-2013, 10:30 PM
3
Re: Pension Options
I think it depends on quite a few personal things as to what would be the best thing to do Doglover. Things like -- Do you have to buy annuities with the three other pensions
- Are you healthy and likely to live a long time.
- Will the other three pensions/annuities be index linked
- Can you manage to live OK on the reduced pensions if you take 25%
- Could you do with the 25% from the three pensions for a large purchase.
- Do you have to decide when you retire, or can you wait a while. They might accumulate a bit more and terms could be better if you leave them to grow a bit more and decide what's best when you draw your o.a.p.
I don't think it would be wise for anyone to give an opinion. Best person is probably your financial adviser. When I retired I had a three day retirement event provided by my employer which covered a lot of retirement issues and they also provided access to a financial adviser f.o.c. Hopefully you have something similar.
13-03-2013, 06:46 PM
5
Re: Pension Options
Originally Posted by The Dog Lover
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OK guys can I have your thoughts on this please. As you know I will be retiring in a few months time. I am 6 years off drawing the state pension under the current legislation so will be managing on 4 employer pension funds of varying amounts the one with my current employer being by far the biggest. I will be drawing the 25% tax free lump sum from this fund but am undecided whether to draw lump sums from the other 3 schemes or not. If I take all the lump sums I will obviously have a much larger sum in the bank tax free which I could use to top up my monthly pension amounts. Or would it be better not to take these and have a higher guaranteed amount paid each month albeit it subject to tax.I have the services of an IFA paid for by my company and will ask him as well for advice but would be very interested to get your thoughts as well as many of you will have gone down this route already.
Thanks
Taking the maximum tax free cash is not always the best option believe it or not. It can depend upon the commutation rate, in other words how much the tax free cash affects your pension income. In many cases pension schemes are tripping over themselves for you to take the maximum available because they will in all probability have to pay you less in pension. If you do not have a defined benefit pension then commutation will not apply. The issue of your income will depend largely on how much income you need, your health, if you are anywhere near the higher rate tax bracket and other circumstances.
There are many options at retirement and a financial adviser should help guide you through basing their advice on your individual circumstances. My personal view would be to use someone independent and who uses the whole of the market, I say this as an IFA. You mentioned that you already have an adviser but please feel free to contact me if you wish. This message is not financial advice as any advice would depend upon your individual circumstances and other factors.
Hope this helps and I hope that you enjoy your retirement
Charlie
14-03-2013, 11:08 AM
6
Re: Pension Options
Originally Posted by Charliefarley
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Hi Taking the maximum tax free cash is not always the best option believe it or not. It can depend upon the commutation rate, in other words how much the tax free cash affects your pension income. In many cases pension schemes are tripping over themselves for you to take the maximum available because they will in all probability have to pay you less in pension. If you do not have a defined benefit pension then commutation will not apply. The issue of your income will depend largely on how much income you need, your health, if you are anywhere near the higher rate tax bracket and other circumstances.
There are many options at retirement and a financial adviser should help guide you through basing their advice on your individual circumstances. My personal view would be to use someone independent and who uses the whole of the market, I say this as an IFA. You mentioned that you already have an adviser but please feel free to contact me if you wish. This message is not financial advice as any advice would depend upon your individual circumstances and other factors.
Hope this helps and I hope that you enjoy your retirement
Charlie
14-03-2013, 11:24 AM
7
Re: Pension Options
Take what tax free money you can. It makes no sense at all to pay tax on any money if you don't have to.Incidentally, don't be surprised if you receive 40 or 50 different tax codes in the first year when you stop work and when you first officially retire.
I received 48 different tax codes during the first year of my retirement; one for each pension provider, which means the tax office sent me 16 different assessments. They're not fit for purpose, so keep checking their figures.
14-03-2013, 11:26 AM
8
Re: Pension Options
Originally Posted by Fogey
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Take what tax free money you can. It makes no sense at all to pay tax on any money if you don't have to.Incidentally, don't be surprised if you receive 40 or 50 different tax codes in the first year when you stop work and when you first officially retire.
I received 48 different tax codes during the first year of my retirement; one for each pension provider, which means the tax office sent me 16 different assessments. They're not fit for purpose, so keep checking their figures.
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