Drawdown type arrangements outside of pensions
Discussion
A close friend of mine died a couple of days ago. He had been ill for a while and the end when it came was mercifully swift. He leaves a wife (age 40) and two children 9 and 7.
He earned good money over the years but has never been much of a saver. The mortgage on the house should be paid off and with his other life cover, SIPP, critical illness and death in service his widow will have a substantial sum to invest.
His widow, who works and has a decent job in her own right. is very smart but not hugely financially literate. I suspect her income will fall some way short of what she needs to pay school fees, maintain the house etc so ideally what she needs is something like an income drawdown arrangement where she can set a withdrawal rate (say 3.5%), have that paid as a month income and hopefully achieve some growth. Really a pension drawdown arrangement but outside of a pension wrapper.
Does anyone know if such a thing exists, please?
He earned good money over the years but has never been much of a saver. The mortgage on the house should be paid off and with his other life cover, SIPP, critical illness and death in service his widow will have a substantial sum to invest.
His widow, who works and has a decent job in her own right. is very smart but not hugely financially literate. I suspect her income will fall some way short of what she needs to pay school fees, maintain the house etc so ideally what she needs is something like an income drawdown arrangement where she can set a withdrawal rate (say 3.5%), have that paid as a month income and hopefully achieve some growth. Really a pension drawdown arrangement but outside of a pension wrapper.
Does anyone know if such a thing exists, please?
williaa68 said:
A close friend of mine died a couple of days ago. He had been ill for a while and the end when it came was mercifully swift. He leaves a wife (age 40) and two children 9 and 7.
He earned good money over the years but has never been much of a saver. The mortgage on the house should be paid off and with his other life cover, SIPP, critical illness and death in service his widow will have a substantial sum to invest.
His widow, who works and has a decent job in her own right. is very smart but not hugely financially literate. I suspect her income will fall some way short of what she needs to pay school fees, maintain the house etc so ideally what she needs is something like an income drawdown arrangement where she can set a withdrawal rate (say 3.5%), have that paid as a month income and hopefully achieve some growth. Really a pension drawdown arrangement but outside of a pension wrapper.
Does anyone know if such a thing exists, please?
Hi Andrew, I am very sorry to hear of your loss and the impact this will have on his family must be tremendous.He earned good money over the years but has never been much of a saver. The mortgage on the house should be paid off and with his other life cover, SIPP, critical illness and death in service his widow will have a substantial sum to invest.
His widow, who works and has a decent job in her own right. is very smart but not hugely financially literate. I suspect her income will fall some way short of what she needs to pay school fees, maintain the house etc so ideally what she needs is something like an income drawdown arrangement where she can set a withdrawal rate (say 3.5%), have that paid as a month income and hopefully achieve some growth. Really a pension drawdown arrangement but outside of a pension wrapper.
Does anyone know if such a thing exists, please?
Yes, they can do such a thing.
The insurance payments, SIPP proceeds and death in service benefits will all be tax free.
Her starting point would be a GIA (General Investment Account) and then moving money into more tax efficient wrapper (such as an ISA).
This would work in exactly the same way as pension drawdown, just with different tax treatment that can be well managed with good and regular planning.
You don't mention if he had any ISA investments, but if he did his widow is also entitled to a one off ISA allowance equal to any value of his ISAs.
It is important that the planning is done before she commits to any course of action, as there may be several options open to her.
Feel free to contact Nik on the IM sticky at the top of the finance forum if you/she would like to find out more about this and I am sure there are also many others here who would be happy to provide their professional help too.
All the very best to everyone at such a difficult time.
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