25% of Pension fund as tax free cash - relief on contributions -no brainer ??

Forget about the tax relief element, and forget about all the other things which make up the pot. All that matters now is how big your overall pension pot is when you "retire" (which means when you start drawing your income from it). It doesn't matter how it's made up. You can take 25% of the total as a TFLS (tax free lump sum) and the remaining 75% would then be used to fund your pension, which in the case of straightforward accumulated funds means you would buy an annuity with it.

If your pot is split between various sub-funds, I gather you can bring them into payment independently. One wheeze is to use a stakeholder plan with zero growth time. Under this scheme you can invest £2160 (if you're a 40% taxpayer) which the govt will top up with tax relief to £3600 gross (if you're a 22% taxpayer you can still invest £3600 gross but it will cost you £2808 instead of £2160). Rather than let this pension plan grow, you can cash it in immediately (provided you're at least 50 years of age) and take

25% of the £3600 out (so the investment has only cost you £1260 or £1908) and buy an annuity with the remaining £2700. If this pays you 6%pa, you can think of it being worth nearly 13% of the £1260 it actually cost you, or 8.5% of the £1908 it cost you. Not a bad return, but of course it's taxable.

If one (or indeed the major) element of your pot is a pension entitlement under a final salary scheme, where therefore the actual value of this element is undefined, I gather the rule is to value it on the basis of 20 times your pension.

So if, for example, your deal provides that you get an annual pension of £20k (perhaps because this is half your final salary), plus a TFLS of 3 times your pension (which is a typical rule of many final salary schemes), then the value of your FSS pot would be deemed to be £60k plus 20x£20k, i.e. £460k. Naturally, the £60k would be counted as part of your overall 25% entitlement. But since 25% of £460k is £115k, it means that after deducting the £60k, there's a spare £55k "25% allowance", and if the rules of your FSS don't allow you to trade down your pension in favour of a bigger TFLS, or if you don't want to do that, you can instead take an extra £55k out of your other (defined value) pots, which means you need to spend less of them to buy annuities, which are often poor value.

Given the size of the funds, >£600K IIUC, I'd say he doesn't need to go down the safety first and relatively expensive annuity route, but instead should concentrate on getting the maximum out of the funds, to use for himself and his beneficiaries, via tax free cash and income drawdown/unsecured pension and alternatively secured pension (ASP).

Daytona