Pensions
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Sale of business with consultancy
Mr A is aged 58 and a director of his firm. He is looking to work part time, and wants to boost his income from his pension. He has considered annuities, but wishes to know if there are any other options.
Having established his own business, as well as working for a number of different companies in his career, Mr A is now considering partial retirement. He wishes to retain consultancy to his firm whilst he hands over the reins. He is aged 58, has existing pensions valued at approximately £200,000, and would like to consider his options. Mr A is willing to accept some investment risk.
Mr A would like to repay his outstanding mortgage, but only requires a small supplement to his consultancy income. He wants the flexibility to vary his income each year depending on how well the company does over the next few years.
By transferring the value of the scheme into a personal pension and then taking Drawdown, Mr A is able to take his tax free cash sum (25% of the value of the fund, or £50,000). He also then takes a reduced income, which can be varied each year, down to a minimum of nil. This allows the fund to continue to grow, ready for when he takes full retirement in a few years time, when the income can be increased. In the event of his death, the full value of his fund is available for his spouse to continue taking an income.