Retirement

[Swindon On Tour]

Bloody tax avoiders! Always seems interesting that retired people avoiding tax is them being well organised. Working people dodging tax is seen as bad.

I still haven't got my head around the pros and cons of taxing the 25% tax free though I still have a few years to work it out.

I have paid plenty of tax in my working life and worked since 16.
All about getting out of the Corporate World and stress of managing teams.

If you can take a decent sum tax free and make that last for at least 2 tax years that is not bad planning.

 

[Guitar Man]

TV will be nowt like that now Marra post interest rates increase, top of the market was when interest rates were 0.1%. Wished I had been in touch about my pensions then as one of my CETVs has went from £122K to £72K in 18 months. That would still have been a great rate 2 years ago mind

My CETVs valuation dropped £70k in 3.5 years.
Wondering wether to go Anninuity or wait for it to recover but i suppose no- one can predict how long it will take to claw that 70k back...5yrs ? 7yrs ? 12yrs ? .

If it was 3yrs or less i would sit tight but if it is going to be 7yrs or more i could be losing 9k a year anninuity rising with inflation + a 55k lump sum at the begginning.

Any experts ? What route would you take ? .

 

[Darlo1973]

I have paid plenty of tax in my working life and worked since 16.
All about getting out of the Corporate World and stress of managing teams.

Tell me about it. Spend all of my time battling with corporate bureaucracy trying to get stuff done when systems and people seem to be put in place to prevent you. Plus we are in the middle of (yet another) corporate restructuring. Things hadn't even settled down from the last one. I need to be out in a few years.

If you can take a decent sum tax free and make that last for at least 2 tax years that is not bad planning.

Depends on how much fun you are having spending it!

 

[Paddy O'Dors]

Bloody tax avoiders! Always seems interesting that retired people avoiding tax is them being well organised. Working people dodging tax is seen as bad.

I still haven't got my head around the pros and cons of taxing the 25% tax free though I still have a few years to work it out.

I think people who've worked all their life for pretty average wages, been sensible and have managed to put a little aside deserve a bit of a break from the relentlessness of the taxman in their retirement tbh. The sad thing is that ordinary people have to jump through hoops or pay someone to find out how to do this.

 

[Swindon On Tour]

Tell me about it. Spend all of my time battling with corporate bureaucracy trying to get stuff done when systems and people seem to be put in place to prevent you. Plus we are in the middle of (yet another) corporate restructuring. Things hadn't even settled down from the last one. I need to be out in a few years.



Depends on how much fun you are having spending it!

You certainly can’t take it with you that’s for sure.
Enjoyment, quality time and leaving something behind for the kids that will be me just about done.

 

[Matt Hopkins]

My CETVs valuation dropped £70k in 3.5 years.
Wondering wether to go Anninuity or wait for it to recover but i suppose no- one can predict how long it will take to claw that 70k back...5yrs ? 7yrs ? 12yrs ? .

If it was 3yrs or less i would sit tight but if it is going to be 7yrs or more i could be losing 9k a year anninuity rising with inflation + a 55k lump sum at the begginning.

Any experts ? What route would you take ? .

Not an expert at all but I'd be surprised if anyone recommends moving from a DB to a DC pension, you may end up being charged a canny bit only to get told no. Unless you work for a certain manufacturer who seem to do it

I think people who've worked all their life for pretty average wages, been sensible and have managed to put a little aside deserve a bit of a break from the relentlessness of the taxman in their retirement tbh. The sad thing is that ordinary people have to jump through hoops or pay someone to find out how to do this.

You don't really have to pay someone to find out how to take pension money tax efficiently there's loads of information out there. I'm certain I linked to a video in this thread about it

 

[Nobby]

My CETVs valuation dropped £70k in 3.5 years.
Wondering wether to go Anninuity or wait for it to recover but i suppose no- one can predict how long it will take to claw that 70k back...5yrs ? 7yrs ? 12yrs ? .

If it was 3yrs or less i would sit tight but if it is going to be 7yrs or more i could be losing 9k a year anninuity rising with inflation + a 55k lump sum at the begginning.

Any experts ? What route would you take ? .

The cetv has no impact on the pension you will get.

It's a measure of the fund needed to provide you with your pension but your pension amount remains unchanged regardless of the cetv (I'm a qualified pension transfer specialist)

 

[Guitar Man]

The cetv has no impact on the pension you will get.

It's a measure of the fund needed to provide you with your pension but your pension amount remains unchanged regardless of the cetv (I'm a qualified pension transfer specialist)

Thanks
I knew that the anninuity is not affected by the CETV's performance but i did think taking the cetv would be my best option, but with it dropping 70k thats not an option now .

My 64 million pound question is how many years the cetv pot will take to claw the 70k back.
If it's going to be more than 5yrs i would probably take my anninuity this year.

What i don't want to happen is take the anninuity this year then 5yrs later find out off my old work mates that their cetv values are back up to what they were.
And on the other hand i don't want to wait 5yrs to find out the cetv pot is still the same or only 10k higher as that means i wouldn't be taking the cetv and would have missed out on 5ys anninuity payments ( about 66k ) .

 

[Nobby]

Thanks
I knew that the anninuity is not affected by the CETV's performance but i did think taking the cetv would be my best option, but with it dropping 70k thats not an option now .

My 64 million pound question is how many years the cetv pot will take to claw the 70k back.
If it's going to be more than 5yrs i would probably take my anninuity this year.

What i don't want to happen is take the anninuity this year then 5yrs later find out off my old work mates that their cetv values are back up to what they were.
And on the other hand i don't want to wait 5yrs to find out the cetv pot is still the same or only 10k higher as that means i wouldn't be taking the cetv and would have missed out on 5ys anninuity payments ( about 66k ) .

This isn't advice.

But unless you have enough money to retire and not need the income that pension can provide to live on then as a general rule of thumb you should leave it where it is.

There are exceptions to this for example if you have seriously reduced life expectancy.

You need to take advice but generally unless you are minted leave it alone.

You sound like you don't like risk which again is a red flag against transfer

This isn't advice.

But unless you have enough money to retire and not need the income that pension can provide to live on then as a general rule of thumb you should leave it where it is.

There are exceptions to this for example if you have seriously reduced life expectancy.

You need to take advice but generally unless you are minted leave it alone.

You sound like you don't like risk which again is a red flag against transfer

Ask yourself this.

You take the cetv and plan an income draw that is sustainable.

The next day the market crashes and your fund falls £70k

What do you do, reduce your income and lifestyle or keep going and run out of money later in life.

That is what is called transfer risk

 

[Billy Smart's Circus]

Thanks
I knew that the anninuity is not affected by the CETV's performance but i did think taking the cetv would be my best option, but with it dropping 70k thats not an option now .

My 64 million pound question is how many years the cetv pot will take to claw the 70k back.
If it's going to be more than 5yrs i would probably take my anninuity this year.

What i don't want to happen is take the anninuity this year then 5yrs later find out off my old work mates that their cetv values are back up to what they were.
And on the other hand i don't want to wait 5yrs to find out the cetv pot is still the same or only 10k higher as that means i wouldn't be taking the cetv and would have missed out on 5ys anninuity payments ( about 66k ) .

Ask your pension scheme for a projection of the tax free cash and income you could receive as at the date you might consider taking the income from the pension.

As mentioned earlier, the CETV value falling won’t affect your level of income at all and could very well be more than you receive by taking the CETV then buying an annuity.

No one route that is right for everyone’s circumstances but I’m hoping that an income quote might put your mind at rest that while £70k is a good old chunk of money on paper, it won’t affect the income you ultimately receive in retirement.

 

[Matt Hopkins]

You need to take advice but generally unless you are minted leave it alone.

You sound like you don't like risk which again is a red flag against transfer

This @Nobby What's the chances of him being recommended a transfer anyway?
As I've said before everyones circumstances are different but about £13k a year DB is not to be sniffed at

 

[Nobby]

This @Nobby What's the chances of him being recommended a transfer anyway?

Fortunately no where near as high as 5 years ago but there are still PTSs out there using template reports saying the client wants flexibility, control and inheritability.

I saw one a couple of weeks ago single guy, no dependants whose main reason for transfer was death benefit so he could leave a legacy to charity. Unsurprisingly the file didn't say which charity

 

[Fletch]

Think when people go on about CETV falls etc , it’s just an offer to turn a final salary (DB) pension into a pot (DC) pension . Seems to be loads don’t understand pensions (lot of it don’t myself ).
A DB pension (final salary ) is where come retirement you stil get a guaranteed annual income (just like a salary ) which rises each year by a certain percentage (again like a pay rise), you get a payslip each month and the money hits your bank. It gets taxed like a salary would . stress free. But when you die your spouse gets say 50% or whatever the scheme rules are then when they die it closes . It is mainly public sector workers who have them as they are seen as a big perk of the job and very expensive to run for the employer (govt), often get half of your final salary but many are 2/3, with a tax free lump sum also . Referred to as golden plated pensions (guaranteed benefits).

The other pension is defined contribution (DC) pension as the only guarantee is the contribution you pay in, with no guarantee what will get back out . Often called the pot . Think if it as a pot of money that is invested in stocks n shares etc, its overall value changes daily as markets rise fall.
You can normally check value on an app or website , if want.
Generally they rise over time but there will be falls and even an odd crash, which if timed badly could massively impact your retirement.
Come retirement you then have two options -
1. Use your pot to Buy an annuity plan which means you get a fixed income til death , pay more for it to rise each year and more for spouse to get some in your death .
2. Drawdown. Where you dip into the pot each year (25% is tax free) and hope it sees you through, income tax will apply. Again it will impact the pot value as you take money out each year but what is left remains invested so “hopefully” still grows to offset the withdrawals a bit.
One common rule was to take out 4% in year 1 , say if £10k, then increase that 10k by inflation each year, and hope it lasts.
Cons - no guarantees , exposed to a market crash and could be stressful, needs managing in old age by somebody if you’re unable to. Pros - can take out more when younger if want (even all if want ) and less as get very old , if any is left can leave it to kids , the pot doesn’t die when you do .
Seen articles recently stating shouldn’t be thinking about what can leave for kids as they prob get your house anyway , if saved hard for retirement then spend and enjoy it. Each to own.
This is often main issue, if have a decent DC pot then chances are you saved hard for it and in retirement need to change mindset and be a spender and enjoy it , it’s yours .
Think of it as your running out of time and not so much money,

Don’t forget crucially if you paid your NI each year then entitled to state pension . You can check in the government gateway website if you have and if missed any years you can buy them (probably has a helpline if unsure ). You get that state pension regardless if you have a DB , DC , or no pension of your own .

 

[Ned Land]

Think when people go on about CETV falls etc , it’s just an offer to turn a final salary (DB) pension into a pot (DC) pension . Seems to be loads don’t understand pensions (lot of it don’t myself ).
A DB pension (final salary ) is where come retirement you stil get a guaranteed annual income (just like a salary ) which rises each year by a certain percentage (again like a pay rise), you get a payslip each month and the money hits your bank. It gets taxed like a salary would . stress free. But when you die your spouse gets say 50% or whatever the scheme rules are then when they die it closes . It is mainly public sector workers who have them as they are seen as a big perk of the job and very expensive to run for the employer (govt), often get half of your final salary but many are 2/3, with a tax free lump sum also . Referred to as golden plated pensions (guaranteed benefits).

The other pension is defined contribution (DC) pension as the only guarantee is the contribution you pay in, with no guarantee what will get back out . Often called the pot . Think if it as a pot of money that is invested in stocks n shares etc, its overall value changes daily as markets rise fall.
You can normally check value on an app or website , if want.
Generally they rise over time but there will be falls and even an odd crash, which if timed badly could massively impact your retirement.
Come retirement you then have two options -
1. Use your pot to Buy an annuity plan which means you get a fixed income til death , pay more for it to rise each year and more for spouse to get some in your death .
2. Drawdown. Where you dip into the pot each year (25% is tax free) and hope it sees you through, income tax will apply. Again it will impact the pot value as you take money out each year but what is left remains invested so “hopefully” still grows to offset the withdrawals a bit.
One common rule was to take out 4% in year 1 , say if £10k, then increase that 10k by inflation each year, and hope it lasts.
Cons - no guarantees , exposed to a market crash and could be stressful, needs managing in old age by somebody if you’re unable to. Pros - can take out more when younger if want (even all if want ) and less as get very old , if any is left can leave it to kids , the pot doesn’t die when you do .
Seen articles recently stating shouldn’t be thinking about what can leave for kids as they prob get your house anyway , if saved hard for retirement then spend and enjoy it. Each to own.
This is often main issue, if have a decent DC pot then chances are you saved hard for it and in retirement need to change mindset and be a spender and enjoy it , it’s yours .
Think of it as your running out of time and not so much money,

Don’t forget crucially if you paid your NI each year then entitled to state pension . You can check in the government gateway website if you have and if missed any years you can buy them (probably has a helpline if unsure ). You get that state pension regardless if you have a DB , DC , or no pension of your own .

That’s a great summary! Please tell everyone about the different types of drawdown next.

 

[Will e]

Think when people go on about CETV falls etc , it’s just an offer to turn a final salary (DB) pension into a pot (DC) pension . Seems to be loads don’t understand pensions (lot of it don’t myself ).
A DB pension (final salary ) is where come retirement you stil get a guaranteed annual income (just like a salary ) which rises each year by a certain percentage (again like a pay rise), you get a payslip each month and the money hits your bank. It gets taxed like a salary would . stress free. But when you die your spouse gets say 50% or whatever the scheme rules are then when they die it closes . It is mainly public sector workers who have them as they are seen as a big perk of the job and very expensive to run for the employer (govt), often get half of your final salary but many are 2/3, with a tax free lump sum also . Referred to as golden plated pensions (guaranteed benefits).

The other pension is defined contribution (DC) pension as the only guarantee is the contribution you pay in, with no guarantee what will get back out . Often called the pot . Think if it as a pot of money that is invested in stocks n shares etc, its overall value changes daily as markets rise fall.
You can normally check value on an app or website , if want.
Generally they rise over time but there will be falls and even an odd crash, which if timed badly could massively impact your retirement.
Come retirement you then have two options -
1. Use your pot to Buy an annuity plan which means you get a fixed income til death , pay more for it to rise each year and more for spouse to get some in your death .
2. Drawdown. Where you dip into the pot each year (25% is tax free) and hope it sees you through, income tax will apply. Again it will impact the pot value as you take money out each year but what is left remains invested so “hopefully” still grows to offset the withdrawals a bit.
One common rule was to take out 4% in year 1 , say if £10k, then increase that 10k by inflation each year, and hope it lasts.
Cons - no guarantees , exposed to a market crash and could be stressful, needs managing in old age by somebody if you’re unable to. Pros - can take out more when younger if want (even all if want ) and less as get very old , if any is left can leave it to kids , the pot doesn’t die when you do .
Seen articles recently stating shouldn’t be thinking about what can leave for kids as they prob get your house anyway , if saved hard for retirement then spend and enjoy it. Each to own.
This is often main issue, if have a decent DC pot then chances are you saved hard for it and in retirement need to change mindset and be a spender and enjoy it , it’s yours .
Think of it as your running out of time and not so much money,

Don’t forget crucially if you paid your NI each year then entitled to state pension . You can check in the government gateway website if you have and if missed any years you can buy them (probably has a helpline if unsure ). You get that state pension regardless if you have a DB , DC , or no pension of your own .

Fantastic post mate, can I add regarding your last paragraph (state pensions)
That the 35 years have to be contracted into SERPS, as I understand it most of the public service pension contributions are contracted out of SERPS.
And crucially it doesn't differentiate on your government gateway records, there is a phone number you can call DWP 0800 731 0181 which will tell you how many years you have towards the state pension and if they are contracted in or out of SERPS.
HMRC 0300 200 3500 to pay additional NI years, I think you can only go back a certain amount of years. (Someone will know)

 

[houghton cut head]

It was only 6 months ago, the point is to get that valuation but also advice.

wow - absolute no brainer then unless she lives until she is about 125

Bloody tax avoiders! Always seems interesting that retired people avoiding tax is them being well organised. Working people dodging tax is seen as bad.

I still haven't got my head around the pros and cons of taxing the 25% tax free though I still have a few years to work it out.

Not really avoiding tax though when you are not earning enough to pay tax in the first place if you are drawing out less than £12750 per year

A gap is fine.

What I mean is that if people are looking at CVs, given I'm senior IT management, if they see one role that came to an end with redundancy and a gap, most will see it is a short career break and someone looking to get back to work.

My feeling is that someone looking at a CV thinking "this person wants to be an assistant IT director here but currently delivers shopping", that would look worse than someone doing nowt.

Might be my perception. I didn't do it and it was not an issue in the end.

My current role is IT Service Director, if I were to ever look for another job, which I am not planning to do, I would totally leave out any "lower level job' off my CV altogether, for example when I retire and if I want to return to work and have been doing a different job in the meantime (100% never going to happen).

Easy to cover gaps with long holiday, spending time looking after family member etc. visiting relatives oversees; just remember to come off Facey when applying

 

[Paddy O'Dors]

Not really avoiding tax though when you are not earning enough to pay tax in the first place if you are drawing out less than £12750 per year

A full state pension will take that allowance up just about.

 

[Jap Stammer]

A full state pension will take that allowance up just about.

Unless the SP is the only pension you get, the likelihood is you're getting taxed, whether you like it or not.

 

[DaveH]

wow - absolute no brainer then unless she lives until she is about 125

Not really avoiding tax though when you are not earning enough to pay tax in the first place if you are drawing out less than £12750 per year

My current role is IT Service Director, if I were to ever look for another job, which I am not planning to do, I would totally leave out any "lower level job' off my CV altogether, for example when I retire and if I want to return to work and have been doing a different job in the meantime (100% never going to happen).

Easy to cover gaps with long holiday, spending time looking after family member etc. visiting relatives oversees; just remember to come off Facey when applying

I suppose the best way to address it would be to say "casual work following voluntary redundancy" without giving details. Even better if you do some form of charity/voluntary work. Changing it to "casual and voluntary work" makes it sound like you have just done bits and bobs to keep occupied and offer something back to society. But that might actually be 3 days delivering shopping and half a day charity work.

This is more a problem I wish I had, rather than anything that happened. Multiple levels of hindsight. Waiting another 2 weeks to hand in my notice would have been the best outcome. Finish one job on a Friday, I had a week off and started a new higher paid job a week later. Starting that job with a years worth of wages in the bank would have been very nice indeed. I think that would have been pretty much the same amount to clear the mortgage. No point in longing over something I didn't get and would not have been expecting anyway. Just another could have been.

 

[Kent_Mackem]

My current role is IT Service Director, if I were to ever look for another job, which I am not planning to do, I would totally leave out any "lower level job' off my CV altogether, for example when I retire and if I want to return to work and have been doing a different job in the meantime (100% never going to happen).

Easy to cover gaps with long holiday, spending time looking after family member etc. visiting relatives oversees; just remember to come off Facey when applying

Presumably you didn't start off in that position and you didn't go downwards on the ladder to get your current position? So you'd only put the single job role on your CV as work experience?
What if you were made redundant next week? I hope it doesn't happens like. But would you still not list other jobs on your CV? Or do you mean only after retirement...