Roger is 60
He is married to Dawn with 2 grown up children, Roger is working and earning an above average salary and Dawn works also. Roger plans to retire at his state pension age of 67.
Roger has a small amount of savings which will cover him and Dawn in the event of an emergency and a small repayment mortgage on their home which is their main asset.
Pension Transfer/Consolidation with reduced Tax Free Cash Lump Sum
Roger has several pension plans with a combined value of £200,563 in addition to being a member of his employer’s pension scheme. Roger wishes to withdraw £25,000 from his pension.
Roger does not wish to draw an income from his pensions at present as he is still working full time, however he would like the flexibility to withdraw adhoc lump sums if required, he aims to retire at age 67 and wishes to adopt a medium risk approach with regards to the investment of his pension fund.
There are a number of options available to Roger including:-
- Draw his benefits available from the existing provider.
- Purchase an annuity with a different provider on the Open Market. This could potentially increase the payments to him.
- Move to Flexi-access Drawdown (or Third Way Plan)
- Use the Uncrystallised Fund Pension Lump Sum rules (UFPLS)
- Move to Phased retirement
- Move to a combination of the above
After going through the options his advisor recommended that Roger proceeds with the Phased Flexi-access Drawdown as it will meet his requirement to receive a proportion of his tax free cash and maintain income flexibility for the future as well as offering Roger more options on death. The new pension provider selected is able to provide flexible benefits and a suitable investment governance for the remaining pension fund after the withdrawal has been made.
Nomination on death
Roger is concerned about what will happen to his pension fund on the event of his death and for this reason his advisor will ensure that Roger has nominated a beneficiary which on this occasion will be his wife, Dawn. If Roger dies before age 75, the nominated beneficiary can receive a lump sum or a beneficiary drawdown which will be tax free. For those aged 75 and over, the options would be a lump sum subject to tax at the beneficiaries marginal rate or a beneficiary’s drawdown/annuity plan could be setup.
It is essential that Roger contacts his advisor and notify them of any material changes to his circumstances which may require his financial situation to be reviewed prior e.g. bereavement, receiving an inheritance, full retirement. Also, his advisor will remain in regular contact whilst managing the recommended portfolio.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
Please note all case studies are fictional and for illustrative purposes only