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