🔴 kzread.info/dash/bejne/gIN9y9izaMK3paQ.html - Click here to watch part 1: Retirement - Drawdown vs UFPLS vs Annuity

@Alexedmartin.

Жыл бұрын

Congrats on your early retirement, Interesting indeed! Currently, I am in dire need of investment advice or tips. Last year, I hesitated and failed to take any action until the year concluded. However, this year, I am determined to try something new, as I am very receptive to various investment ideas.

@donaldgaff2271

Жыл бұрын

@@Alexedmartin.

@Alexedmartin.

Жыл бұрын

​@@donaldgaff2271 I value your recommendations. It's challenging to locate a trustworthy person. I could really use your investment advisor after seeing how much money you've made through investing. If you don't mind revealing her information, that is.

@donaldgaff2271

Жыл бұрын

@@Alexedmartin. By looking for her name online, you can quickly uncover her information. She recently appeared on CNN and she is really simple to deal with no matter where you're located

@stephaniefythm

Жыл бұрын

@@donaldgaff2271 You are right, I am one of many who has benefited from investing with Regina Louise Collaro. 2020 is an unforgettable year in my life, back then I lost my job due to covid and had no reason to live. Regina made a good life possible for me through passive income and I owe her my life. To be honest, I feel like she is an angel of who was sent to help those who are suffering financially.

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

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.

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

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

2 жыл бұрын

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

@slayerrocks2

2 жыл бұрын

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?

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

@MeaningfulMoney

2 жыл бұрын

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

2 жыл бұрын

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

@alanwhitney3263

2 жыл бұрын

We would never be able to retire !

@mwscuba

2 жыл бұрын

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

@stevegeek

2 жыл бұрын

@@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.

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

@MeaningfulMoney

2 жыл бұрын

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...

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

Жыл бұрын

Thank you so much - glad it was helpful!

@simonpage2238

Жыл бұрын

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

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

2 жыл бұрын

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!

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😮

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

2 жыл бұрын

Cheers bud - I appreciate you!

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

@MeaningfulMoney

7 ай бұрын

Good to have you here!

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

21 күн бұрын

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

21 күн бұрын

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

21 күн бұрын

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.

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

@MeaningfulMoney

2 жыл бұрын

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

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

@PhilipMurray251

2 жыл бұрын

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

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

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

2 жыл бұрын

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

@vinay4886

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

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

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

2 жыл бұрын

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

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

2 жыл бұрын

Glad it’s helpful now, Stuart!

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

Жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

Glad it was helpful, Christine!

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

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

@MeaningfulMoney

2 жыл бұрын

Glad it was helpful, Ken! Thanks for watching…

Thank you. Very clear explanations

@MeaningfulMoney

Жыл бұрын

Thank you Sharon - glad it was useful!

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!

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

@MeaningfulMoney

2 жыл бұрын

Thanks Roberto - glad it all made sense!

Excellent content. Thanks Pete

Green job Peter

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

@MeaningfulMoney

2 жыл бұрын

Thanks Justyn - appreciate the feedback

Brilliant many thanks and easy for me to understand

@MeaningfulMoney

2 жыл бұрын

You are welcome!

Great video, thank you

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

@MeaningfulMoney

2 жыл бұрын

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

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

Great video Pete, very informative

@MeaningfulMoney

2 жыл бұрын

Thanks 👍

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

Superb and very clearly communicated as always, thank you

@MeaningfulMoney

2 жыл бұрын

Thank you kindly, Nick!

Thanks, Pete, that was great!

@MeaningfulMoney

2 жыл бұрын

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

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

Жыл бұрын

I’m glad, Phil - thank you 🙏🏻👍🏻

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.

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

2 жыл бұрын

Hahhahahaha! The complex lives of my examples.

Pete, proper job, thanks.

@MeaningfulMoney

2 жыл бұрын

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

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

Really excellent, thank you !

@MeaningfulMoney

2 жыл бұрын

You are welcome, Rod!

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

Жыл бұрын

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

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.

Really really great video.

@MeaningfulMoney

2 жыл бұрын

Cheers Daniel - glad you enjoyed it!

Brilliant thank you very informative.

@MeaningfulMoney

2 жыл бұрын

Glad it was helpful, Kevin - thanks for watching!

@Kmm7387

Жыл бұрын

@@MeaningfulMoney spam messages agreed ?

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

2 жыл бұрын

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

2 жыл бұрын

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

@malcolmmaclean9380

4 ай бұрын

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

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

2 жыл бұрын

Hope the examples were helpful, Alan...

@alangordon3283

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

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

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

2 жыл бұрын

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

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

2 жыл бұрын

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

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

Жыл бұрын

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 👍🏻

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.

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

@MeaningfulMoney

2 жыл бұрын

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

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.

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

2 жыл бұрын

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

LTA exceeded here?

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

2 жыл бұрын

Hi Jon - yes, drawdown plans are invested just like an uncrystallised pension (one where you haven’t taken benefits). Have you watched this video: kzread.info/dash/bejne/gIN9y9izaMK3paQ.html

@dudeatx

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

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

Good show

@MeaningfulMoney

2 жыл бұрын

Thank you!

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

@MeaningfulMoney

2 жыл бұрын

Ah, glad it was helpful Simon - thank you!

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

2 жыл бұрын

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: kzread.info/dash/bejne/qYBsmcxsZLmpdc4.html

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

2 жыл бұрын

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.

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

Жыл бұрын

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

Жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

I’m glad, Martin - thanks for watching!

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

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

Cheers Sandy - appreciate the kind words!

Any real world examples at all?

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

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

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

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

2 жыл бұрын

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!

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

2 жыл бұрын

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

2 жыл бұрын

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

2 жыл бұрын

@@johnkennet3036 @meaningfulmoney Thank you, John and Pete

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

2 жыл бұрын

Thanks Becky - glad it was useful!

One thing I’m missing here is why doesn’t Tina take her 25% tax free sum of 125k and save all the messing about.put it in the bank and live off that for 10 years?

Do you think that a person who could still earn income should live on pensions and savings without falling victim to inflation and life expectancy? It seems counterintuitive

@MeaningfulMoney

2 жыл бұрын

There’s no such thing as ‘should’! Work if you want or need to, but if you can live on pensions only and don’t want to work, then do that. Everyone needs to take stock of their own situation and make a decision for themselves.

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

2 жыл бұрын

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

Please do one on tax returns once retired 😔

@MeaningfulMoney

2 жыл бұрын

They're not much different from when you're working. Harold. If you have a specific questions, send it to hello@meaningfulmoney.tv and I'll do my best to answer...

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

Жыл бұрын

A few people said this, so I listened: kzread.info/dash/bejne/Yqx6m6RmmJOTdtI.html

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

@richardbowman8306

2 жыл бұрын

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

2 жыл бұрын

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!

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

2 жыл бұрын

Sorry, @kyaume21 - not really my forté

@kyaume21

2 жыл бұрын

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

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

@MeaningfulMoney

Жыл бұрын

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

Good information and insight but feel examples are sided to people with around 1 million would of been better with a bigger difference in pots/overall available money

@MeaningfulMoney

2 жыл бұрын

Noted, Kevin. Obviously when considering the impact of the LTA, the pots need to be large. But the principles of Drawdown, UFPLS and Annuities apply no matter the size of the pot

Great info. It would be also worth to mention that in case of UFPLS first taxable pension withdrawal, one might have to pay emergency tax.

@MeaningfulMoney

2 жыл бұрын

Yep, that’s true…

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

2 жыл бұрын

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

Жыл бұрын

@@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.

For the effort producing the slides 😊

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

2 жыл бұрын

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

2 жыл бұрын

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

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 😊

I love your videos but agree with the comments that the figures you use are not the norm. Why not aim for people who have been on minimum wage most of their life .

@MeaningfulMoney

2 жыл бұрын

Hi Mohamed. I understand, but the video is designed specifically to help people understand the interplay between crystallisation methods and the lifetime allowance. Folks who have been on minimum wage all their lives are not, with the best will in the world, going to have an issue with the lifetime allowance. Maybe I’ll do a version addressing smaller pension funds. Watch this space…

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

2 жыл бұрын

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

2 жыл бұрын

@@MeaningfulMoney Ah right, understood, thanks!

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

2 жыл бұрын

Glad it was helpful, Matt!

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

2 жыл бұрын

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

2 жыл бұрын

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

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

Жыл бұрын

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

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

2 жыл бұрын

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

2 жыл бұрын

@@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

2 жыл бұрын

@@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

2 жыл бұрын

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

2 жыл бұрын

@@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”.

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

@pierceandhide5413

2 жыл бұрын

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

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

@MeaningfulMoney

2 жыл бұрын

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

2 жыл бұрын

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??