Have My Cake And Eat It

Have My Cake And Eat It

I was unsure about the options under my large defined benefit scheme as I had recently taken early retirement from a senior position in a UK bank.

My situation was complicated by the fact that I had recently remarried and both my wife and I had three children each from previous marriages.

We had agreed that we would keep our finances separate and leave our personal assets to our children, with the exception of our main property. My wife wished to continue working, receiving a high income as a City lawyer.

I asked Simple to review my pension arrangements including the defined benefit scheme with a transfer value of £1.9m and a separate defined contribution scheme of £200,000. I also had around £750,000 in savings.

I needed to generate a relatively large income as I had one child at private school and two children at university. I had also projected that my expenditure would continue to be high after the children had finished their education.

I asked Simple to also consider both my inheritance situation and also the fact that my pension funds were greater than my protected lifetime pension allowance of £1.5m.

I had originally asked the trustees of the Bank pension scheme whether they would allow a partial transfer of my defined benefit pension and was advised no. Simple knew, through their wealth of experience, that I had in fact been miss informed.

Simple advised that I took a partial transfer of 40% of my defined benefits from the scheme which was amalgamated with my defined contribution scheme into a low-cost income drawdown plan. I then took the remaining pension from by defined benefit scheme as an early retirement pension and also took an income from my savings. This was all arranged by Simple.

What Simple were able to do was produce a plan which enabled me to have a secure inflation proofed income and in addition have a flexible drawdown plan for the benefit of my children which would also be efficient from an inheritance tax perspective.

This resulted in me having a relatively large secure inflation proofed income topped up from my savings and my income drawdown plan. The projections on my income drawdown plan showed that there would be substantial benefits for my children on my death. Simple also demonstrated that they had reduced my lifetime allowance tax liability.

I was delighted with the outcome in that it was a good split between security and flexibility which enabled me to have my cake and eat it.

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