Read about our ...Case Studies – At Retirement
Reaching retirement, with several pensions, wanting to ensure that the benefits are drawn and maximised as efficiently as possible….
When we work with clients for a number of years prior to their retirement, we have the benefit of planning in advance so there are no surprises. But we are frequently approached by individuals already reaching retirement age, wanting to know how best to take their pension(s). There are many areas in which we can provide guidance and assistance to improve the retirement income received.
The following is an example where we helped a client with her retirement benefits (names have been changed).
Sarah was referred to us by her accountant as her previous advisor had retired. She was approaching age 65, looking to retire from her senior position with a London Architects Practice with a Self-Invested Personal Pension (SIPP) – the result of an earlier consolidation exercise – and other investment pots (including a rental property) accrued over the years with the view of providing a tax efficient income in retirement.
She was aware that she could receive 25% of her pension fund as a tax free lump sum, and the rest of the pot could then provide an income, but after some discussion it was clear she didn’t immediately need the whole £100,000 that her £400,000 pension pot would provide.
Once we had explored her circumstances taking into account her other retirement income (including the rental property income) and considered the options available in detail, we concluded that ‘phased drawdown’ would be suitable for Sarah.
Phased Drawdown enables you to access your pension in stages without having to take the full 25% tax free lump sum at outset, (click for more information about Phased Drawdown).
There were several benefits of doing this – a tax efficient income, flexibility for Sarah to vary her income amount, and improved death benefits for her financially dependent children.
The size of the pension pot(s) available will generally determine the options that are likely to be appropriate. Some involve more investment risk and would typically only be suitable for those with larger pots. Our approach is to go through your circumstances and your available pensions and come up with a solution that suits your particular needs.
• Past Performance is not necessarily a guide to future returns,
• Pension charges could change in the future,
• Taxation and legislation could change in the future.
This case study gives an indication of how we have helped our client, however every client and their situation is different and we would always recommend that you seek advice if some of the points made are characteristic of your own circumstances. JJFS accepts no responsibility for action taken based solely on the content of this case study.
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