3 Retirement Planning EXAMPLES

[@MeaningfulMoney]

🔴 kzbin.info/www/bejne/hICsmqmwbcSEq6M - Click here to watch part 1: Retirement - Drawdown vs UFPLS vs Annuity

[@SalgadosVillaltas]

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

[@SalgadosVillaltas]

@RawlinsesPierces That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well

[@SalgadosVillaltas]

@RawlinsesPierces I will give this a look, thanks a bunch for sharing.

[@ianseward9928]

Very informative, could do with dialling down the sums to more humble amounts . And some explanation re the typical funds used in drawdown and how the payments are made eg selling units etc

[@TerryBarton-f3s]

Simple explanation, content rich, affable presentation. 10/10

[@johnokane5017]

Whilst it is great to give us examples and helpful too, I would be surprised if lots of those watching would have such generous levels of cash funds. All three are right at lifetime allowance level and I would think most people with personal pension funds are not at such levels. I appreciate this is in your own time and you cannot go through every possible scenario but doing more of a spread of funds would have been good. That said it is appreciated you taking time to post this.

[@bobsonclimber]

Belting video Pete. At 38 and just getting finances together for retirement this really helps me visualise what I am working towards. Keep up the good work, many thanks for all your content

[@MeaningfulMoney]

Thank you so much - glad it was helpful!

[@simonpage2238]

I'm 37 and doing exactly the same! Fully agreed - this clear and visual approach really helps make it easier to plan.

[@mikeroyce8926]

Wow Pete, having had my hour with PensionWise and having watched abut 200 YouTubre videos on retirement, SIPPs, ISAs etc and having read "Beyond the 4% rule" I thought I had grasped pretty much everything and then you produce this video... This is the first time I have heard about a temporary annuity. Fortunately for us, our income comes from a few rental properties and will be supplemented by our state pensions. We can get tax-free cash by re-mortgaging (and thereby reducing IHT) or we can sell a property pay out a lot of Capital Gains Tax to acquire other lump sums (the less fun way of reducing inheritance tax). Your video has confirmed to me that our strange plan of continuing to grow the pension without touching it before age 75 seems right for us.

[@MeaningfulMoney]

I'm delighted it was helpful, Mike - thanks for commenting and watching!

[@slayerrocks2]

Hi Mike I hope you don't mind me asking, but how did your hour with PensionWise go? I'm in my 50's, and consuming lots of videos like this. I wonder if PW is going to be aimed at people with zero knowledge, or if it will be worthwhile? How did you find it?

[@nikki_jp4216]

Great video. I hadn't realised it was all so complicated!! Better wrap my head around this...

[@MeaningfulMoney]

It can be, Nicola, but for most of us it's simple enough. The examples were designed to provide options for complexity! Seek advice if you're not sure...

[@garyboag8681]

Great video and great explanation of the different scenarios. I found this really useful as I’m at the stage where I’m trying to understand and plan for my retirement with an RS6😮

[@Robertio83]

Love this geezers videos. I'm only 40 but it's good to be prepared

[@MeaningfulMoney]

Good to have you here!

[@AndyBrownTripleYourClients]

Thanks Pete, I can see why you have job. Like you always say if you only get advice once it makes sense to do it when making plans for retiring. Hats off for putting that deck together!

[@MeaningfulMoney]

Cheers bud - I appreciate you!

[@sharonmcilveen2043]

Thank you. Very clear explanations

[@MeaningfulMoney]

Thank you Sharon - glad it was useful!

[@kennztube]

This was very useful and informative, food for thought for myself.

[@MeaningfulMoney]

Glad it was helpful, Ken! Thanks for watching…

[@PeteMulv]

Another great video, just got to try and mold it to my situation, 67 this year, and just wondering when to stop work and this helps, thanks.

[@MeaningfulMoney]

That's the challenge, right?! Seek advice if you're not sure...

[@dudeatx]

12:53 I didn't think one could still invest money in the drawdown pot. I'm having trouble understanding the difference between UFPLS and moving into drawdown.

[@MeaningfulMoney]

Hi Jon - yes, drawdown plans are invested just like an uncrystallised pension (one where you haven’t taken benefits). Have you watched this video: kzbin.info/www/bejne/hICsmqmwbcSEq6M

[@dudeatx]

@@MeaningfulMoney I have thanks, I'll watch it again to make sure I didn't miss anything.

[@philipwilliams8114]

Excellent content. Thanks Pete

[@christines5430]

Thank you for this excellent video! Lots to think about and plan for.

[@MeaningfulMoney]

Glad it was helpful, Christine!

[@stuartb3690]

Great Video Pete, I'm glad that you have dissected this in so much detail. How lucky we are to have this wealth of free information at our fingertips. I wish I had seen this type of content 20 years ago !

[@MeaningfulMoney]

Glad it’s helpful now, Stuart!

[@nathanwooldridge85]

Great examples and an episode wouldn't be complete without the mention of a campervan :)

[@MeaningfulMoney]

I know, right?! I really should think of something more original...

[@justynevans]

Wow. Thank you! Great video. Love the examples.

[@MeaningfulMoney]

Thanks Justyn - appreciate the feedback

[@johnporcella2375]

I need to watch this great video a few more times to get it fully. In the meantime, I am confused by the £40,000 vs £32,000. Am I right in thinking that Tony wants £32,000 after tax as income for spending? So does he receive £40,000 from the drawdown and he pays £8,000 income tax OR does he receive £32,000 from drawdown and the drawdown pays the income tax of £8,000? I suspect the former, but want to get this straight in my head! Thanks in advance for helping!

[@ryanwdavies1]

Please consider a show on how ifas are paid, it's y bit of a black box and I am hesitant to engage ifa

[@garyhollywell2112]

Brilliant many thanks and easy for me to understand

[@MeaningfulMoney]

You are welcome!

[@pistopit7142]

£16760 a year from pension completelly tax free. That is just amazing. Imagine how powerfull this is if combined with ISA withdrawals.

[@MeaningfulMoney]

Properly powerful stuff - tax breaks are powerful and should be maximised!

[@philjones4234]

Extremely helpful and answers the question that I had on whether investment growth affects the LTA. I found it easy to understand your examples and found them of great benefit.

[@MeaningfulMoney]

I’m glad, Phil - thank you 🙏🏻👍🏻

[@robertotriunfo9674]

Great video, I've seen many examples around the LTA but they never explained it in such a clear way thank you.

[@MeaningfulMoney]

Thanks Roberto - glad it all made sense!

[@trade2fire257]

Great video, thank you

[@sir-chat-a-lot]

Can you do an update now LTA rules have changed?

[@timthorne3412]

As with the previous example on FAD and UFPLS explainations this was FABULOUS with a capital F !!! ...well done better than my own financial advisors explaination which was no where near as good as yours

[@MeaningfulMoney]

Thanks Tim. All I can say is that there’s 25 years of experience and practice going into these explanations!

[@CrappyProducts]

Great video Pete, very informative

[@MeaningfulMoney]

Thanks 👍

[@Allsystemsaredown]

Great video. Very clearly explained. Thanks! It takes a while to get your head around this stuff when you've ignored it for the first sixty years of your life!

[@MeaningfulMoney]

It really does - it's why I have a job! Thanks for watching, Allsystemsaredown

[@vinay4886]

Well said! Many of us wishing we could go back in time and manage our finances better… 😄

[@stephenlaverty6266]

Fantastic slides and info really breaking it down as simply as possible very interesting, or am I just a bit sad lol

[@NickForest999]

Superb and very clearly communicated as always, thank you

[@MeaningfulMoney]

Thank you kindly, Nick!

[@TaiwoOmotosho-m9v]

Could you update these example now that LTA is abolished,Pls?

[@dmitrybelyakov]

Thanks, Pete, that was great!

[@MeaningfulMoney]

Glad it was helpful, Dmitry - thanks for watching...

[@djmgmm]

Fantastic video. Excellent examples and great food for thought for myself. Off to run my numbers again on my retirement planner spreadsheet.

[@MeaningfulMoney]

Really glad it was helpful, David - thanks for watching!

[@keelyparker140]

Hi Pete, thanks for all your great information. I'm still trawling through your 9 years plus of videos and finding the gems.😁My question is - From your examples today it seems like even a single person is looking at around a half a million pound pension pot to retire around age 60. I've been crunching our numbers for a few months now and assuming a few things, I don't think we need much more than half of that as a couple. Am I being really naive or am I missing something ? The assumptions are 1. That thinking about the slow go years and the no go years , by the time we are both at retirement age our state pension and lgps/ teacher pension will suffice. 2. As we are already saving about 500 a month of our joint income (and we are happily holiday and doing what we want to do currently ) then we won't need anymore than our current income and can even reduce by a couple of thousand. 3. As we are happy to "die with zero" ( fab book btw and worth a read) then we don't need our pot to keep growing and just need it to cover the period from retirement to state pension age. Obviously this is taking into account all the ways we are going to be taxed on everything 🙄. I hope this makes sense and I'd love your thoughts on this. I'd also love you to do some examples from us "poorer"😂 individuals who still dream of retiring in the sunshine 😂.

[@MeaningfulMoney]

Hi Keely - all sounds like you've thought things through very well. Investments and pension pots are there to bridge the gap between income and outgoings, and how much you need is entirely dependent on the size of that gap, and the other factors you mention. Well done, keep going and good luck!

[@festerarl6653]

Very good video and some good examples chosen - a combination of which is not too dissimilar to the position I am in. Thanks.

[@MeaningfulMoney]

Glad it was useful, Andrew - thanks for watching and commenting!

[@jessicasquire]

In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone

[@Lemariecooper]

The approach of selling pensions with the promise that a tax-free lump sum would pay off mortgages and provide a lifelong pension was common in the 1990s. However, many factors can affect the outcome, including changes in the housing market and interest rates. It's crucial for investors to seek personalized advice and consider diversified financial strategies to ensure long-term financial stability

[@Erikkurilla01]

it's vital for investors to seek personalized advice and adopt diversified financial strategies. Working with a knowledgeable financial adviser is crucial for achieving long-term financial stability and freedom.

[@Erikkurilla01]

I've experimented with a few over the past years, but I've stuck with ‘’Angela Lynn Schilling” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.

[@anorak211]

These examples have ridiculously high incomes, savings and pensions....do more of these but with realistic finances!

[@MeaningfulMoney]

I understand, but in order to illustrate the flexibility of the various options, and particularly the Lifetime Allowance issues, I need to use larger figures. The principles apply universally though, so you can just plug your own figures in...

[@stevegeek]

What I was just thinking...how many people have this much pension / savings? Not many I think.

[@alanwhitney3263]

We would never be able to retire !

[@mwscuba]

Dont think they do im 51 with a 700k pot only in the last year have i had to worry about 40% tax

[@stevegeek]

@@mwscuba Good effort! You must have been stuffing money away for a few years. I have around £500k and I’m 53 and been a higher rate tax payer for last 10 years. Guess I should have saved harder.

[@suekay5782]

Thanks, I learn something every time I catch one of your Presentations. I believe I have an old DB Final Salary Pension, paid in for 16 years, since 1989. Have no idea of value or process, I learnt a bit today though. Time to trace it now..... As Salary was lower in 2005, I don't expect it is worth much.

[@johnkennet3036]

They are normally index linked, though sometimes have an annual cap once deferred (e.g. 2.5%, 5%). It might not be too bad as that will have missed most of the high inflation years, until this year...

[@MeaningfulMoney]

I reckon you might be surprised, Sue - as John says, the indexing will have added quite a bit over that time...

[@malcolmmaclean9380]

You will probably be pleasantly surprised. I have a dB pension I only paid into for 8 years in the 90s and it is forecast to pay me 12k a year when I'm 67 if I don't take tax free cash

[@roberthorsford4266]

Pete, proper job, thanks.

[@MeaningfulMoney]

You're welcome, Robert - thank you for watching!

[@andylayard8114]

Great video as ever. Can you do more examples please? Thanks

[@MeaningfulMoney]

Thanks Andy. Any specific examples you’d like to see?

[@Kmm7387]

Brilliant thank you very informative.

[@MeaningfulMoney]

Glad it was helpful, Kevin - thanks for watching!

[@Kmm7387]

@@MeaningfulMoney spam messages agreed ?

[@cooper8t]

Really really great video.

[@MeaningfulMoney]

Cheers Daniel - glad you enjoyed it!

[@MrHotrod79]

Really excellent, thank you !

[@MeaningfulMoney]

You are welcome, Rod!

[@tommydunning5749]

Hi Pete, recently joined your subscription as I am getting to that age. 60 April. Whilst I know you can’t recommend any advisors I am wondering is there a list of financial planners you know of in the Widnes (Cheshire) area? Like your presentation skills so please keep it up. Feel you are explaining at an acceptable pitch for the audience. 👍🏻

[@MeaningfulMoney]

Thanks Tommy. Nearest I can get to you is Altrincham. Check out Smart Financial Planning: smartfinancial.co.uk/

[@ryanwdavies1]

Green job Peter

[@alangordon3283]

I’m leaning towards UFPLS. I’ve a good DB pension which I started receiving at 42 which is due to increase in a few years time .

[@MeaningfulMoney]

Hope the examples were helpful, Alan...

[@alangordon3283]

@@MeaningfulMoney thanks Pete I never knew about temporary Annuity’s or UFPLS till i watched your very informative channel.

[@nickrostampour]

Pete I’m a financial advisor new to the game and 3 months into my new role . These videos are unbelievable . Thank you and well done on a great channel

[@MeaningfulMoney]

Hi Nick and welcome to the profession - really glad the videos are helpful!

[@vernonwells4093]

Pete, another great video thanks! So many variables around risk attitude, LTA and income tax liability, also the piece on IHT. Keep the Videos coming.

[@MartinHopkinson]

Another excellent video, Pete. The graphics made everything so clear.

[@MeaningfulMoney]

I’m glad, Martin - thanks for watching!

[@richardharnwell3331]

Whoa! This is exactly the sort of detailed content I’ve been looking for - perfect, thank you!

[@MeaningfulMoney]

You’re welcome, Richard. I’m glad it hit the spot!

[@Patriciacraig599]

No better way to prepare for retirement than buying, holding and buying more dividend stocks. You will thank yourself you did!

[@PhilipMurray251]

Fact. It's interesting to see dividends like SAFT, PSX, NKSH and PM doing well after all the doomsday analyses from naysayers

[@mwscuba]

ok can you as a uk resident use QROPS to help with the LTA ? and guessing anytime you take taxable income from your pension the " only allowed to pay in 4K rule " kicks in

[@MeaningfulMoney]

Transferring to a QROPS is a benefit crystallisation event, and would trigger an LTA test at that point. After that, I get a little hazy - offshore pensions are really not my thing! To your other question - yes, once you take any taxable income from a pension (even income that falls within your personal allowance and hence is taxed at 0%) you are subject to the £4K Money Purchase Annual Allowance

[@sandylow4688]

Smashing stuff Pete. Very well explained and that takes a lot of work.

[@MeaningfulMoney]

Cheers Sandy - appreciate the kind words!

[@richardbowman8306]

How many times can I press thumbs up?! Thank you Pete. Really appreciate you and what you do for us. I'll definately be giving Jacksons a call in around 18 months to get onto your waiting list :-)

[@MeaningfulMoney]

You're a star, Richard - so glad it was helpful!

[@gusmacdonald4302]

Thanks very good video. My situation is similar to the last example with DB scheme, but I have a range of options which use up different amounts of LA. Are you available for financial advice?

[@MeaningfulMoney]

Potentially, though it would be my firm rather than me personally as I’m am now coaching and supervising my advisers rather than being too hands-on. meaningfulmoney.tv/work-with-pete

[@alisterwilliams9122]

Pete, you’re a legend. Thanks so much for all your videos!

[@MeaningfulMoney]

You’re very welcome, Alister - thank you for saying thank you!

[@julias-shed]

Another useful video thank you. Have you done anything on options when a pension fund doesn’t offer flexible drawdown? Thanks.

[@richardbowman8306]

Hi Julia, sorry, I'm not Pete but just wanted to help. If your current pension provider doesn't offer flexible drawdown then you should be able to transfer it to one that does. At the accumulation stage, think of your pension provider as basically a bank account with benefits - once you have your pension pot, you don't need to stay with them through drawdown. You can take your pot and deposit it with whoever is offering the best deal for you. You can do this at any point before retirement with the more modern pension providers like Fidelity or Hargreaves Lansdown, but if you have an older pension with Zurich or someone like that, you may have to wait until your selected retirement age before you can transfer it penalty free. Either way though, you're not stuck with your current provider.

[@MeaningfulMoney]

Great answer, Richard - thanks for jumping in. Nothing I'd add there, Julia - pensions freedoms are a great thing; the pensions world is your oyster!

[@mikewiseman7947]

Thanks Pete - great video as always. The worked examples really help to understand the options and choices available. Don't worry about how long your videos are - I find they fly past due to the quality of the content and your presentation style.

[@MeaningfulMoney]

Thanks you Mike - really appreciate that! 🙏🏻👍🏻

[@Dunk1970]

Oh no! When did Joy leave Tony? I always thought Tina and Joy were more than just friends, but Tony couldn't see it. 😉 Otherwise a great video. Thanks.

[@MeaningfulMoney]

Hahhahahaha! The complex lives of my examples.

[@seanbyrne2220]

Good show

[@MeaningfulMoney]

Thank you!

[@solowaveychick]

Great video I'm 26 and I understand how to plan my retirement better for the future. Definitely make a mission to utilise ISA and savings accounts

[@MeaningfulMoney]

Good luck! Starting at 26, the future is very bright! 👊🏻👍🏻

[@simonspencer3108]

An amazing video - so much detail. Really well presented - thanks a lot Pete!

[@MeaningfulMoney]

Ah, glad it was helpful Simon - thank you!

[@chrisdaviesguitar]

would the funds in pre-retirement and drawdown, be invested differently? I mean, would the pre-retirement fund earn more interest that the drawdown fund? I talked to a fund management company last week, they said they'd never heard of UFPLS.

[@MeaningfulMoney]

A fund management company wouldn’t necessarily have heard of it, even though UFPLS has been a thing since 2015! It’s not their area at all. Yes, I think you should invest differently when drawing down versus when you’re accumulating. Here’s the ultimate guide: kzbin.info/www/bejne/rX2baJ1pabt2e80

[@doubledutch13]

Pete that was brilliant. I retire soon with significant transfered pension pot which should be a simple draw down for me. But your show has been great for demonstrating options. Thanks.

[@MeaningfulMoney]

Glad it was helpful John! Thanks for watching...

[@gusmacdonald4302]

Hi Pete, can the lifetime allowance charge always be paid by the scheme and the balance transferred or would this ever need to come of the tax free amount? Likewise if taken as cash and 55% tax applies?

[@MeaningfulMoney]

Are you talking about DB pensions, Gus? If so, then you’d need to check with the specific scheme you have in mind. Also, some older less flexible DC plans may not have the facility to pay the LTA charge.

[@gusmacdonald4302]

@@MeaningfulMoney I was thinking about this if I was to transfer out of a DB scheme.

[@throwaway296]

LTA exceeded here?

[@pascaljoly5752]

Does it mean that once you crystallise some of your pension it doesn’t grow interest anymore? If so, then you should crystallise the smallest possible amount each year right? And repeat the process each year

[@MeaningfulMoney]

Doesn’t mean that at all. If you crystallise a pension fund into drawdown, it remains invested and you get all the investment options available to you as before the crystallisation

[@pascaljoly5752]

@@MeaningfulMoney thanks a lot for all your answers to my questions, appreciate it

[@joemacdougall9205]

Very good video. I watch it as if the rules are going to be the same in 45 years time 🙃

[@MeaningfulMoney]

Probably not, but maybe I'll still be shooting KZbin videos then...!

[@markukblackmore]

That is a really helpful video. I just have two questions of a very practical nature. When you have a SIPP with on online platform and you crystallise, do you get given a separate account on the online platform with those funds inside? And do you have to contact your other pension providers to tell them you have crystallised your SIPP or is it completely separate from those other pots?

[@MeaningfulMoney]

Good questions, Mark. Yes, you'll generally have a separate drawdown account on a platform to keep things tidy. It can get more complex if you have a full SIPP with third-party investments, but for most of us mortals with simple platform pensions, it's straightforward enough. No you don't need to let the other pension providers know if you have crystallised elsewhere. You will normally have to fill in a questionnaire before your crystallise though, so that's where you tell them what percentage of the LTA you've used elsewhere

[@Ed_start]

@@MeaningfulMoney Hi Pete, I am looking at this very issue myself as I’d like to juggle my SIPP content to keep the bulk of the cash and lower growth funds in the uncrystallised (I’m already over the LTA) and the higher growth funds in the crystallised and take their growth as income, to minimise LTA pain). Hargreaves Lansdown have separate pots for drawdown and uncrystallised, but Interactive Investor do not and neither do AJ Bell. Problem is that HL fees are really high and they charge separately on both pots so their fees get really high, more than offsetting the LTA advantages made possible by the account separation. II & AJB just use simple averaging to work out your LTA penalty at 75 with a part crystallised SIPP.

[@janexgill]

Why is the value to crystallise £600k please? Where does that value come from?

[@Peakwanderer]

Pete can you cover the way that it is possible to take £20K tax free please. where you crystalise £30K take £7.5K tax free and then your personal allowance of £12.5K.

[@MeaningfulMoney]

You’d need to do this via Drawdown. Crystallise £30k. Take £7.5k tax-free cash. Put the £22.5k in a drawdown account and take £12,570 out of it, leaving £9,930 invested the drawdown account.

[@simonpage2238]

Great article - thank you Pete. The clearest explanation I've ever seen of this. This was the video that convinced me to subscribe!

[@MeaningfulMoney]

I’m grateful, Simon - glad it was helpful!

[@MrWhoAmI57]

Great video. I have a couple of questions. What are the typical costs of managing pensions once you hit retirement and are there more fee efficient ways to manage drawdowns? I assume the pension companies moving money into drawdown and paying tax on your behalf are not doing it free of charge. In the last example, is there no additional tax rate to pay on the funds over the lifetime allowance? I thought it worked out to 55%, or did buying the annuity alleviate the additional tax charge. Thanks!

[@MeaningfulMoney]

Costs for running a drawdown plan are much the same as running a pre-crystallisation pension, except s9me providers charge an annual fee of (say) £120 a year or something similar. If the scheme pays the LTA charge and you take the excess as income, not a lump sum, the LTA charge is 25%, but then you pay income tax on the income, which roughly evens it up if you’re a higher rate taxpayer.

[@MrWhoAmI57]

@@MeaningfulMoney Ah right, understood, thanks!

[@nigelmorley8092]

Another great video Pete....I've just hit 60 and even though I worked in financial markets (not pensions!) all my life, you manage to clarify and simplify a pretty complex subject that is a real boon to folks of all ages. Indeed I had watched dozens of your videos and decided that I needed some professional advice. It was mainly to clarify my own thoughts and critically to make sure I wasn't making any undoable mistakes as I received/constructed my pensions and savings. To that end you ended up with me as a client despite some serious competition :-) (though you (and Mark) may be regretting it now of course !!)

[@MeaningfulMoney]

It's a privilege to serve, Nigel. Ask mark to let me know when you're on a call with him next and I'll put my head in the call!. you're in great hands with him - he's a superb adviser!

[@johnporcella2375]

In the Tony example, is there any merit in refusing to take his state pension? This would free up about £6,500 each year of his personal tax free allowance that could be used to pay less tax on his private/corporate pension income. Furthermore, when he does claim his state pension, it would at a higher rate. Admittedly, he needs to live another 17 years for the state pension income foregone to be overtaken by the extra amounts received.

[@somerrush6989]

If you have a local gov DB scheme, can you use UFPLS?

[@MeaningfulMoney]

No, sorry. UFPLS is only for DC schemes

[@somerrush6989]

@@MeaningfulMoney thanks, just wondered if I could take from 55 using that method! And top up from Investment ISA until 67.

[@kyaume21]

Can you give advice on what to do if you want to return to the EU to retire and you have a fair amount of money coming from the sale of a UK home?

[@MeaningfulMoney]

Sorry, @kyaume21 - not really my forté

[@kyaume21]

@@MeaningfulMoney Fair enough. Any hint on where to go for advice?

[@vinay4886]

Pete, thank you for the brilliant video with patient explanations. Please could you do some more examples, especially around the age 75-evaluation and inheritance tax liability? Also, I’m nowhere near the LTA but I thought the tax on anything above was 55% not 25%? More videos around the pension theme please 🙏

[@johnkennet3036]

If you draw it out as a lump sum its 55%. If you leave it in and take it as drawdown its 25% and then your income tax rate. Which works out at 40% total at basic rate and 55% total at higher rate income tax.

[@MeaningfulMoney]

If taken out as a lump sum it's 55%, but if it stays in the pension fund subsequently to be drawn as income, it's a 25% LTA charge, then income tax when you draw

[@vinay4886]

@@johnkennet3036 @meaningfulmoney Thank you, John and Pete

[@richardsmeeton8910]

Hadn’t heard of temporary annuities before. This has earned my subscription. Look forward to further examples.

[@MeaningfulMoney]

Can be useful in the right hands, Richard - glad to have you with us!

[@CaraVanOlogywithBecky]

Amazing slide pack and video, thanks! Brilliantly useful examples (okay some of the numbers were huge but very useful to make points which wouldn’t have been possible otherwise) and appreciated your choice of showcasing a spectrum of relationship set ups :)

[@MeaningfulMoney]

Thanks Becky - glad it was useful!

[@32mlucas]

Imagine paying over £100k LTA charge, only for the government to remove the LTA altogether soon afterwards. Being risk adverse often introduces more risk.

[@goodyan4453]

Bit unrealistic, can u do single male 60, 350 k total pot, state pendion due at 67?

[@davidmurray5926]

Any real world examples at all?

[@mattsennett]

Really good examples Pete. I think it's so important to have this information to hand as it gives us all options to consider when it gets to our turn!!

[@MeaningfulMoney]

Glad it was helpful, Matt!

[@celialyon1273]

Thanks Pete, really interesting. I was one of the people who requested more info after your earlier You Tube video. I know you can’t answer everyone’s questions, but I agree with some of the other comments that the LTA won’t affect a lot of people (inc me!). I am still trying to work out if FAD or UFPLS works better, especially if you can set up regular UFPLS withdrawals 🤔 Also, in the graphics, when you move from the uncrystallised to the crystallised pots, and these both remain invested, are they two separate pots? Or are they treated as one investment by the platform provider? Thanks as always Pete

[@MeaningfulMoney]

Hi Celia - Obviously I can only put in so many examples. but maybe I'll add a video with pots for more ordinary folks! To your second question, most platforms will separate out pre- and post-crystallised pensions into separate accounts.

[@celialyon1273]

So if you want a regular withdrawal for income, is Flexi Access the better option?

[@thearab7177]

Where one is in excess of the LTA by some margin, I struggle to think why you wouldn’t move it across the first LTA line ASAP & pay the 25% charge? - The only reason to keep it on the left is in the hope that the government becomes more generous with the LTA rules at some point in the future (the track record suggests not)? Once over the line, choices are higher marginal tax if taken out or more LTA on assumption investment returns exceed increases on the LTA - i.e. tax on successful investment only. What am I missing?

[@johnkennet3036]

Possibly the inheritance tax angle, depending on your priorities. Note also you are still assessed for the LTA charge on the growth of the drawdown fund at age 75 - ie if the drawdown fund is bigger than when it started you pay another LTA charge on the excess. And drawing out average growth from such a large pot is probably more than the basic rate tax limit. Also the £268K / 25% tax free lump sum will need managing as a taxable account until you can move it into ISAs over many years. But yes taking the max tax free lump sum and crystallising at least up to the LTA is optimal for LTA excess reduction.

[@thearab7177]

@@johnkennet3036 Thanks John, I guess in my head the 25% is unavoidable on crossing that first line, so on basis of history, the earlier that "pill" is taken the better. Once in the second column, it remains outside the estate I believe so no change there? The income can then be drawn with a medium term aspiration to have the fund at the same level as when the original LTA line was crossed. At that point you have calculatable decisions about marginal rates of income tax & only if the fund exceeds expectations does one have to pay more tax..... Great returns create tax liability which is better than no returns... Anything there that you would correct my thinking about? Always good to kick thinking & options about but I think in my mind me default plan would be to cross that first line quickly.... Thanks for your critique!

[@johnkennet3036]

@@thearab7177 Yup. I don't think it makes much difference when you crystallise amounts _above_ the LTA. Growth first and LTA charge second or the other way round is the same. Barring any pension law changes. Its not worth paying higher rate tax to draw out the growth unless its for your income needs. I guess death before age 75 is a factor (which is also optimal for inheritance tax...). Dying between pension age of 57 and the LTA second test at age of 75 is about 15-20% odds according to ONS). I guess do the early crystallisation and if you die in that period and growth was above the basic rate tax band you have paid less LTA charge. I guess its sort of a "win" ;-)

[@MartinHopkinson]

I did the maths on this a couple of months ago, so I hope I can answer. It's a bit long but stay with me! The first reason is that if you die before 75 you'll never have to pay the tax at all, so don't pay until you have to! The second is that you might pay more tax but you'll end up with more money. Let's say you're 60 and you've crystallised up to the lifetime allowance but you have £400000 left (lucky you!) As I understand it, your question is "why not crystallise that too to minimise the tax?" Here we go: first option, don't pay the LTA, let it grow at, say, 5% for 15 years and £400000 becomes £846750. Now, at 75, pay the LTA (£211680) and you have £635070 net. Second option: pay the LTA immediately (£100000) and let your remaining £300000 grow at 5% for 15 years and you'll have £635070! Look familiar? But the catch is you now have to pay LTA again on the growth. So without any more maths, it's going to be less than the first option (about £83000 less). By paying the tax early, you lose out on its compound growth. Furthermore, you're only ever going to lose 25% of that growth to LTA; you get to keep the rest. I'm no expert and I'm willing to be corrected if I'm wrong, but that's my 'man-maths' layman's answer.

[@thearab7177]

@@MartinHopkinson Thanks Martin - you have framed the question correctly! - I know at some point I will need to build that spreadsheet too - My only reservation about your comment is that the piece over the LTA (£400k in your example) always gets tested as I understand it, even if you die before 75. The age 75 test is not done on pot already in drawdown that has previously been tested. I think it boils down to which you think is going to grow faster - A) the LTA B) Your pre tested pot. I assume B given almost every change made since “A Day”.

[@ksks6619]

Suppose I have £100k in my pension pot. I am allowed to withdraw 25% of it tax free (drawdown)= £25k My pension pot then becomes £75,000 If I want to take per year the level of the personal allowance only (currently 12750), can I take the £25k in portions every month to top up the 12750? My question phrased differently, Suppose I take 12750 per year, with my example, I can therefore more or less take it in 6 years time and dry out the pot. But can I divide the £25k drawdown by 6 and take £4166 per year as well? It means per year I could get tax free £16916. Is it possible? PS : I assume I have no other income from elsewhere and I am over 55 yrs old. And yes I believe you would not recommend this because I would have dried out the pot, which might not be desirable, but my questions above are only to understand if technically I would be allowed to take the personal allowance out of the main pot and top it up with the 25% tax-free drawdown?

[@MeaningfulMoney]

Yes, you could take all your 25% tax free cash out in one go, then keep your withdrawals to below £12,570 each year and pay no tax on the withdrawals (assuming no other income, as you say). Alternatively, you could draw £16,760 each year, made up of £4,190 tax free cash and £12,570 taxable and pay no tax as the ‘taxable’ part would fall within the personal allowance. Your understanding is correct 👍🏻

[@Christopherfife]

Wonderful video, Pete! Great information and presentation as always.

[@PompeyMatt17]

I'm lucky enough to be on a Final Salary scheme (Direct Benefit)..projections show it'll give me around £32k a year. I have no idea if this is considered enough these days! are there ways of maximising a Final Salary option?...thank you!

[@johnkennet3036]

Some DB schemes allow you to buy extra DB income, though not many. Look up if you have that option and if the cost is worth it. Otherwise SIPP it. Only you can decide what is enough. £32K is around the UK median full time employment earnings so that's a pretty good baseline. Remember that DB and state pension are taxable income so you will be paying 20% tax above the personal allowance (though no National Insurance).

[@MeaningfulMoney]

@PompeyMatt17 - ultimate, whether £32k per year is 'enough' comes down to your lifestyle and spending patterns, but as @John Kennet says, it's certainly a tidy outcome. You may be able to add AVCs on the side, but these are DC, not DB , though they could be subsidised by the company to the tune of very low fees. Also, in some cases AVCs can be linked to the main scheme and provide a pot from which to draw the tax-free cash. You'll need to speak to the pensions department, I reckon

[@albertboulderwardthe3rd590]

Jane's additional £10k a year pension would also be taxed on top of losing her original £119k from her pension pot, seem's to me to be a poor outcome for someone who has saved all their life. Might have been better to have channeled funds into cash/s&s isa's instead.

[@duncan2858]

Why is UFPLS only recommended for ad hoc withdrawals and not ongoing withdrawals?

[@MeaningfulMoney]

It can do both, but generally UFPLS is easier to organise for ad hoc lump sums. There are providers that can arrange regular UFPLSs, though, so whatever works for you. Note that nothing in the examples constitute recommendations - they’re just examples.

[@celialyon1273]

If you set up regular UFPLS withdrawals, isn’t this basically the same as FAD? Other than taking the tax free amount as chunks rather than a one off amount??

[@shanecantwell227]

Great videos, do you have any examples for NHS workers as antidotally I have heard that this is complicated. I have two 1995 and 2015. I also have a couple of smaller pensions, BT and contract out of SERPs 😊

[@malgorzatamiturska6461]

For the effort producing the slides 😊

[@isctony]

I read that the average pension pot in the UK is just over £60k so it's a shame not to look at more extreme example at the lower end, pension pots of £500k to £950k I guess might be standard for your normal clients but those that can't afford your services but wish to learn - it's difficult with the examples given. A pension pot of £150k say might have been an interesting example

[@MeaningfulMoney]

A few people said this, so I listened: kzbin.info/www/bejne/ZqmpanVjnZVgfNE

[@nigel1654]

67 with a 900k pension fund. Sad man. Life well and truly going down hill at this point. I know, it's just a sample.

[@haroldbetterson1877]

Please do one on tax returns once retired 😔

[@MeaningfulMoney]

They're not much different from when you're working. Harold. If you have a specific questions, send it to [e-mail] and I'll do my best to answer...

[@elmsley7156]

Interesting video, could we have more realistic examples, only the lucky few will have huge pension pots.

[@pierceandhide5413]

Lookup Karen Marie Emma, she's a certified fiduciary.