Research from pensions and retirement specialist LV= highlights how millions of married couples have no idea about their spouse’s pensions and retirement plans.
The LV= Wealth and Wellbeing Monitor* - a quarterly survey of 4,000+ UK adults – reveals:
Figures from LV= shows how simple planning could enable a retired couple to generate an income of more than £30,000 a year without paying income tax. (See example below)
“LV=’s research indicates that millions of married people are not talking to their partners about their pensions and retirement plans. That’s a mistake because couples who jointly plan their retirement can be much better off when they stop working.
“Most people have a good idea of what their house is worth, and the same attitude should apply to their retirement funds. After a lifetime of saving, the value of a retirement fund can be worth as much as a property so it’s important that people know how much their retirement savings worth and the potential death benefits they offer.
“The best way for people to ensure they have the retirement they want, their pension income lasts throughout their retirement and that they avoid unnecessary tax bills is to consult a financial adviser. This is especially true for people who plan to retire within the next five years.”
It is possible for a couple to have a combined income of £33,520pa without paying tax.
Richard 62 and Monica 60 are looking to retire. They are mortgage free and have no immediate need for a lump sum to pay off debts, but do require a joint income of £33,000 pa (after tax) to live off. They each have a pension pot valued at circa £400,000 and their adviser recommends that they each use part of their tax free cash allowance to provide the required income, as follows:
Richard |
Monica |
Total Join Income |
||
TFC |
DD Income |
TFC |
DD Income |
|
£4,190 |
£12,570 |
£4,190 |
£12,570 |
£33,520 |
TFC: Tax-free cash. DD: Drawdown
“On retirement, many people’s first instinct is to request their full tax free cash entitlement. However, unless a large lump sum is needed for a specific purpose, this is not always the wisest course of action.
“If flexibly accessing a pension, it can often make sense for couples to retain most of the tax-free cash entitlement until a later date, looking to utilise the personal allowance (and potentially the basic rate tax band) to draw tax efficient income instead.”
* LV= surveyed 4,000+ nationally representative UK adults via an online omnibus conducted by Opinium in June 2021.
** Includes couples in civil partnerships
*** UK population stats from ONS. Total UK adult population is 52.7m UK adults (aged 18+).
LV= is a leading retirement and protection specialist. When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.
LV= and Liverpool Victoria are registered trademarks of Liverpool Victoria Financial Services Limited (LVFS) and trading styles of the LV= Group of Companies. Liverpool Victoria Financial Services Limited, registered in England with registration number 12383237 is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, register number 110035. Registered address: County Gates, Bournemouth, BH1 2NF. Phone: 01202 292333.