Background
Harriet has the following pensions:
Final salary scheme – 15 years service – normal retirement age 65
Personal Pension – fund value £226,780
Personal Pension – fund value £54,890
Challenges
She wants access to £30,000 per annum for two years until the benefits of the final salary scheme and the state pension are received
She does not believe in annuities
She wants to preserve her pension fund for her children
If her work situation changed she needed to have access to income
What We Did
- We discussed with Harriet her options which included buying an annuity or a short term annuity or an unsecured income plan.
- We established whether the existing personal pension plans could be moved without penalty
- We moved the plans to an unsecured income plan, took a tax free amount of £70,000 but deferred taking income until Harriet’s income needs increased
The Results
- Harriet received a tax free capital sum of £70,000
- She used this to provide her with income for the next 2 years thus saving 40% or even 50% tax
- The pension fund was available to her children less tax for the next 12 years
- She could start to draw down an income should her circumstances change
- She did not have to buy an annuity to satisfy her needs