Debt free without exhausting an entire pension fund

A senior executive approaching retirement was keen to repay his mortgage liability but thought his goals were not achievable. We were also able to take advantage of tax efficiencies.


Married aged 58 our client had amassed a significant pension fund and ‘non-liquid’ assets. He had minimal savings and wished to consider ways of repaying his mortgage.


Home £1,000,000
Cash £20,000
Investments £100,000
Holiday Home £250,000
Pension Funds £1,200,000
Mortgage Debt -£75,000

Challenges Faced

1.Debt reduction

Whilst happy with his current employment the client wished to start considering his withdrawal strategy from the ‘rat race’. The first stage of this was to try and repay all of his debt, namely his relatively small mortgage.

2. Limited liquid resources

Although the client had built up considerable pension assets and property the liquid assets at his disposal were relatively limited and where possible he was looking to maintain these.

3. No need for income

As still actively in work the client did not require any additional income and furthermore any such income would be subject to higher rate tax.

4. Existing adviser

This client already had an adviser in place and was referred to us by another client. The advice being put forward was to take benefits in their entirety from his pension, generating a tax free lump sum of c£300,000 and an annuity of c£50,000 per annum.

What we did

The client’s needs were actually very specific. He was looking to release a lump sum that could repay with mortgage liability, the existing adviser had effectively ignored this and had recommended a course of action that would release considerably more tax free cash than necessary whilst at the same time generating additional unwanted taxable income. By considering the full range of retirement options open to the client we were able to meet his exact needs.

Ongoing Tax Planning. By using phased drawdown we were able to work with the client, over the following years as he entered retirement, to ensure that he maximized the tax opportunities when taking his benefits.

The Results

The client’s original aims were achieved in a tax efficient manner and furthermore the ongoing flexibility of the contract has enabled him to control his income position (and in turn the tax paid) whilst retaining control of his sizeable pension funds.

Having originally thought that he couldn’t achieve his goals, due to the advice of a previous adviser, the client is now relieved to be debt free without exhausting his entire pension fund. Furthermore the tax planning opportunities of drawdown has enabled the client to enter into retirement in a tax efficient manner.