Retirement planning that survives the journey from accumulation to drawdown.
For most of our clients, retirement planning is not a question of whether enough has been saved. It is a question of how much of that wealth survives after tax, after inflation, after the order in which different pots are drawn and whether the structure holds together for thirty years rather than thirty months.
The technical decisions are larger than they first appear. Pension funding strategy, the post-LTA Lump Sum Allowance regime, the drawdown order across pension, ISA, GIA, and bond, and the IHT treatment of pensions all interact. Getting them right is worth materially more than getting any single one of them right in isolation.
Pension funding before retirement
For working clients who are still building, the planning is dominated by how much can legitimately go into pension and how that interacts with everything else.
Annual Allowance and tapering. High earners face a tapered Annual Allowance that progressively reduces the amount that can be contributed to pension each year. The interaction between adjusted income, threshold income, salary sacrifice, employer contributions, and bonus structuring determines the actual headroom — and the planning often involves working backwards from total compensation to see what the genuinely available limit is.
Carry forward. Unused Annual Allowance from the previous three tax years can be carried forward in a defined order. For a business owner approaching a sale, this can move six- and sometimes seven-figure sums into pension pre-completion, but the rules on the order of use, and the requirement to have been a pension scheme member in those years, need to be navigated carefully.
SSAS. For business owners, a Small Self-Administered Scheme can be a powerful structural tool, particularly where the business holds commercial property, where loanback to the sponsoring employer is useful, or where there is a specific intent to control investment decisions inside the scheme. SSAS is not appropriate for every business owner, but for the right client it does things a SIPP cannot.
The decisions around drawing benefits
Normal Minimum Pension Age. From 2028, the age at which most members can first access defined contribution pension benefits will rise from 55 to 57. For clients planning early access, the change matters and the protection rules around it are technical.
The Lump Sum Allowance. The Lifetime Allowance was abolished in April 2024 and replaced with a Lump Sum Allowance and a Lump Sum and Death Benefit Allowance. For clients with significant pension wealth, the new regime changes how tax-free lump sums are accessed, how protection certificates apply, and how death benefits are treated. Anyone with historic pension protection should have their position re-tested under the new architecture.
Drawdown sequencing. The order in which different pots are drawn — pension, ISA, GIA, onshore bond, offshore bond has a material effect on lifetime tax. The naive assumption that pension should be drawn first is often wrong, particularly where IHT planning makes pension a useful structure to leave intact. The right sequence depends on the client’s overall position and is worked through case by case.
Pensions and inheritance tax. The treatment has been moving. The direction of recent policy is to bring pensions into the IHT net, which materially changes the planning logic for any client with significant pension wealth. The detail and effective date matter, and the planning needs to keep pace with implementation.
Why independence matters here
Pension planning is one of the areas where a restricted advice model most commonly defaults to the firm’s in-house pension wrapper, regardless of whether the wrapper is the right home for the client’s specific position. The right SIPP for a £250k pension is often not the right SIPP for a £5m pension. SSAS providers vary enormously in what they support. Drawdown providers vary in flexibility and cost.
Independent advice means the wrapper is selected for fit rather than for distribution. Across a thirty-year drawdown horizon, the difference compounds.
FAQs
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The treatment has been moving. Pensions historically sat outside the estate for IHT purposes. Recent policy has moved towards bringing pensions into the IHT net, with the implementation detail and effective date subject to ongoing legislative process. For any client with significant pension wealth, the planning needs to be specific to the current rules at the time of decision.
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There is no single right answer, it depends on what other assets are available, what the client’s tax position is at the point of drawing, and what role the pension plays in the wider plan (including IHT). For some clients, the right answer is to leave pension untouched as long as possible and draw from ISA and GIA first. For others, the right answer is to draw pension early to use up basic-rate band that would otherwise be wasted. Modelling answers the question; rules of thumb don’t.
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Sometimes yes, sometimes no. Consolidation can reduce administrative complexity and improve flexibility, but old occupational schemes sometimes carry valuable features such as guaranteed annuity rates, protected tax-free cash above 25%, scheme-specific death benefit treatment that consolidation would lose. Before consolidating, those features need to be identified and weighed against the benefits of a single modern arrangement.
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DB transfers above the regulatory threshold require specialist permissions and a formal transfer value analysis report. Where DB transfer advice is warranted, we work with a specialist DB transfer firm and coordinate the planning around the outcome. The presumption in regulation and in our firm is that DB benefits should be retained unless there is a clear, evidenced reason for transfer.
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