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Topping Up Income From Pension

Topping Up Income From Pension

I want to take partial retirement and need additional income, but do not wish to take my entire pension fund.

Client Circumstances:

  • Mr Green is a widower aged 62.
  • Has decided to cut his working week down to 3 days.
  • Requires additional income and a lump sum of £25,000 for home improvements.
  • Has a pension fund of £450,000.
  • Mr Green has two children.

Recommended Solutions:

  • Nomination of death benefit in favour of two children.
  • Phased Drawdown.
  • Use £100,000 of Pension fund.
  • Take 25% Pension Commencement Lump Sum, (PCLS) £25,000.
  • Remainder of £75,000 into Drawdown can provide a maximum annual income of £6,187 based on 150% of GAD and 3% Gilt yield.
  • Balance of pension fund left undrawn can provide future PCLS and income.

Benefits from advice given:

  • Provides additional income now, without using the whole fund.
  • Provides a lump sum for Home improvements.
  • Allows Mr Green to take partial retirement, without having to take a drop in income.
  • Can use remaining fund to top up income as and when needed.
  • Can use drawdown.
  • Maintain Return of Fund tax free death benefit on undrawn pension of £350,000.

NOTE: Death benefits reduction in Drawdown

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Future Servicing

We will look to carry out a regular review of your circumstances, objectives, needs and portfolio performance to ensure all arrangements continue to be suitable and advise of any changes that may be appropriate.

This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.

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