Starting the process of accessing your DC pension

[fossyant]

As in, 5 years closer to death than 62?

More like, am I willing to do 5 or 10 more years in work, when I could be doing better things with my time.

 

[Bonefish Blues]

More like, am I willing to do 5 or 10 more years in work, when I could be doing better things with my time.

Excuse my morbidity - I used it to overcome my work inertia, iyswim

 

[SpokeyDokey]

Same (ish) here. I took my DB pension at 53 and took the full 25% tax-free lump sum. All my calculations indicated that even with the reduced pension caused by the early retirement and the reduced annual ‘salary’ caused by taking the lump sum that it was the best outcome assuming a decent life expectancy. The lump sum has been invested.

I had options to defer the pension or take a lower (or no) lump sum and I worked all the scenarios I could think of. There were some specific factors for me that also came into play, such as a change to the early retirement factor and the commutation factor if I were to defer it.

In summary, have the conversation and do your sums.

Similar.

I took mine at 53 before the legislation changed.

My maths said it would be the best outcome for me. I don't regret the decision especially as the annuity has paid at near 10% over the last 17 years.

 

[wakemalcolm]

If anyone is contemplating annuitisation, now's the best time to do it for a long time in terms of VFM.

Isn't necessarily a good match for me but I can see the appeal of spending part of your pension fund on an annuity to keep warm and put food on the table

 

[kynikos]

Yes, annuity rates are at a long term high at around 7.5% for a 65 year old but factor in the loss of the fund and I'm still convinced that makes them not very attractive. My fund returned 8.3% last year and the capital's still mine.

 

[Bonefish Blues]

Yes, annuity rates are at a long term high at around 7.5% for a 65 year old but factor in the loss of the fund and I'm still convinced that makes them not very attractive. My fund returned 8.3% last year and the capital's still mine.

And that illustrates the need to model ones own circumstances and appetite for risk because no two of us will be the same.

 

[PaulSB]

@Mazz you do know you don't have to buy an annuity?

Second if I might put forward a thought? If you have to cash in a pension to pay for your daughter's perhaps you should discuss this closely with your daughter. To be quite frank while I will always help my children, I wouldn't put my retirement income at risk to pay for a wedding.

 

[Mazz]

@Mazz you do know you don't have to buy an annuity?

Second if I might put forward a thought? If you have to cash in a pension to pay for your daughter's perhaps you should discuss this closely with your daughter. To be quite frank while I will always help my children, I wouldn't put my retirement income at risk to pay for a wedding.

True I don't need to buy an annuity. Maybe it's possible to take out a cash lump sum from the pension pot and leave the rest in the pension pot and decide what to do with it later?

As for paying for the wedding, that's where personal opinion comes in. Each to their own I guess.

 

[Profpointy]

I'm 60 and still working full-time.

I have a DC pension (2 actually, although only paying into the one where I currently work).

Those of you who are retired and have an annuity, I have a question... I understand that an annuity is an income for life, but what if you need a cash lump sum e.g. paying for son or daughter's wedding, new car etc?

Does the annuity allow some means of "withdrawing" cash from your pension pot? Thanks

This may or may not apply to your circumstances, but with my fund-based pension(s) which are I guess are DC type, I could take 25% tax free lump sum from each, conveniently clearing a mortgage and being mostly re-invested in ISAs, and lived off for a few years. Am now also taking £12750 pa which is the tax free limit.

It was a bit of tricky form filling as they do seem to want to steer you to financial advisers, but got there in the end

 

[wakemalcolm]

@Mazz have you taken advantage of the Government free pension guidance service available through the money helper site?

It's their job and will have better more up to date guidance than 90% of well meaning randos on cycling forums (but which 90%?)

Their cycling chat's rubbish though.

 

[Mazz]

@Mazz have you taken advantage of the Government free pension guidance service available through the money helper site?

It's their job and will have better more up to date than 90% of well meaning randos on cycling forums (but which 90%?)

Their cycling chat's rubbish though.

Yes, reading through it and will also have a 1-2-1 meeting with PensionWise.

 

[fossyant]

You could take 25% tax free and leave the rest in a drawdow . They still grow/fall with any investment, then at another time you can start to withdraw some but it will be taxable. Lots of options to think about.

 

[Alien8]

And make sure you understand the difference between crystallised and uncrystallised funds, ie UFPLS.

 

[Gunk]

You could take 25% tax free and leave the rest in a drawdow . They still grow/fall with any investment, then at another time you can start to withdraw some but it will be taxable. Lots of options to think about.

I did that two years ago at 59, paid the mortgage off and I just draw some of the interest on the remaining balance which is around my tax free allowance which tops up my other incomes, best thing I ever did. Enabled me to pack in a full time job that Ì was fed up with.

 

[PaulSB]

True I don't need to buy an annuity. Maybe it's possible to take out a cash lump sum from the pension pot and leave the rest in the pension pot and decide what to do with it later?

As for paying for the wedding, that's where personal opinion comes in. Each to their own I guess.

When I took my pension I only took the lump sum. I then took an annual drawdown as needed to supplement my wife's pension until I reached state pension age. At this point I stopped the drawdown, I'm now considering an annuity or other form of income. Plenty of ways to skin a cat, a good financial adviser will be a great help.

As for the wedding I completely agree. I only offered this as a consideration, no criticism intended and I hope none taken.