Retirement

[DaveH]

(IMO, morally) There should really be protection for schemes already open prior to the rule change.

That's what I'm trying to get my head around for my own circumstance. I'm not totally sure whether that applies. I think the following says it does:

I agree with that.

I essentially have a contract with a private company and what I signed up for was that I could take an annual pension with a defined benefit, from the age of 57. That is now less than 10 years away. So they are committed to paying me X amount per month for the rest of my life, from the point I decide to draw my pension. If the government change the state pension age by say 3 years, that doesn't mean I'm going to live for another 3 years. It makes no difference to what they are currently committed to pay out.

I can understand the point of view of the government saying they are struggling to afford the state pension and need to push the age. Fine, that is the economics of the country.

But, my pension company has planned and budgeted for me potentially withdrawing at 57. Ok, they have applied penalties to that and if I go that early then I will only get 61% of what I could otherwise get. There is no economic or business reason (that I know of) why those in the scheme should have their benefits withheld.

I'm changing jobs in early May, with an attractive pay rise. One consideration is to put a bit more in the scheme, but faced with that and an ISA (which I don't currently have), an ISA sounds more sensible. There is not going to be anyone sitting saying "No, I know we all planned for you to take your investment back at this time, but we have changed our minds, off to work you go".

 

[YorkMackem]

Don’t know how you do that job, I did it for a couple of months after retiring and it honestly was the worst job I’d ever had in my life, this was for Asda.

See above, only my personal opinion of course.

What was it you disliked so much?

 

[viccarlton]

What was it you disliked so much?

Too many things that could go wrong that I had no control over, equipment not working, someone picks the orders, someone else loads the van, sat nav couldn't find addresses, student accommodation, care homes, nurseries etc.
It's not all just toothless along to Joe Bloggs knock on door here's your groceries, bye bye.
I hated it.

 

[YorkMackem]

Too many things that could go wrong that I had no control over, equipment not working, someone picks the orders, someone else loads the van, sat nav couldn't find addresses, student accommodation, care homes, nurseries etc.
It's not all just toothless along to Joe Bloggs knock on door here's your groceries, bye bye.
I hated it.

Ain't loving it myself tbh. Amen to the SDS device not knowing where to take you. Bear in mind that we deliver to edge of NY Moors, Harrogate and York inner city, which has loads of flats and independent living where you might have a 400 meter walk INSIDE the building.

The biggest concern though is the toll on a 62 year old body.

 

[42]

What is the advantage in doing that, considering you get 25% added to pension contributions?

Because once your pension is upto the personal allowance (12,570) then everything over it, the 25% you get, the government then claws 75% of it back (assuming a standard rate tax payer)

 

[WHD]

Because once your pension is upto the personal allowance (12,570) then everything over it, the 25% you get, the government then claws 75% of it back (assuming a standard rate tax payer)

Yeah, I get that, but 25% added to your contributions is still a good chunk. More than the interest from an ISA.

My missus only had DB pensions, so we started a DC one to build her pot up. As a couple we are better off putting into that than any other savings as far as I can work out. Even if her pot only gets up to say £50k from £37k contributions, we can take £12.5k tax free then three years of £12.5k a year. That's got to be better than putting it in an ISA.

 

[42]

Yeah, I get that, but 25% added to your contributions is still a good chunk. More than the interest from an ISA.

My missus only had DB pensions, so we started a DC one to build her pot up. As a couple we are better off putting into that than any other savings as far as I can work out. Even if her pot only gets up to say £50k from £37k contributions, we can take £12.5k tax free then three years of £12.5k a year. That's got to be better than putting it in an ISA.

I think his point was to build pension upto a certain level, then to put extra into ISA as the tax kick back is only worth 5% over the personal allowance, which you're trading off for increased flexibility

 

[The Great Soprendo]

I think his point was to build pension upto a certain level, then to put extra into ISA as the tax kick back is only worth 5% over the personal allowance, which you're trading off for increased flexibility

Surely this depends on a lot of things....eg if you are a higher rate taxpayer and getting 40% rebate but would be taking the pension out within the standard tax band in retirement you'd gain more than that overall. Even more so if paying into a pension stops your salary from reaching 100K+ threshold for even more tax. Or you might keep your taxable earnings below the threshold for child benefit tax for instance by paying into a pension.

Then there's the NI benefit potentially if through PAYE, as well as employer contributions of course, which I'm sure everyone would utilise.

I still think overall that pensions are one of if not the best place for money in the long term, but appreciate the benefit of not putting all eggs in one basket, especially if future governments decide to change the rules.

The other benefit of pensions is actually that you avoid the temptations that come with access to the money! Certainly for me that's helped build a pot that I probably wouldn't have otherwise.

 

[Tuono]

Surely this depends on a lot of things....eg if you are a higher rate taxpayer and getting 40% rebate but would be taking the pension out within the standard tax band in retirement you'd gain more than that overall. Even more so if paying into a pension stops your salary from reaching 100K+ threshold for even more tax. Or you might keep your taxable earnings below the threshold for child benefit tax for instance by paying into a pension.

Then there's the NI benefit potentially if through PAYE, as well as employer contributions of course, which I'm sure everyone would utilise.

I still think overall that pensions are one of if not the best place for money in the long term, but appreciate the benefit of not putting all eggs in one basket, especially if future governments decide to change the rules.

The other benefit of pensions is actually that you avoid the temptations that come with access to the money! Certainly for me that's helped build a pot that I probably wouldn't have otherwise.

I'm 66 years old and self employed so don't get any employers contributions, I already get the state pension and still pay into my private pension. Sticking money into an ISA means I have access to money if and when I need it without paying tax on it. I just don't trust this or any government to not move the goal posts.

 

[42]

Surely this depends on a lot of things....eg if you are a higher rate taxpayer and getting 40% rebate but would be taking the pension out within the standard tax band in retirement you'd gain more than that overall. Even more so if paying into a pension stops your salary from reaching 100K+ threshold for even more tax. Or you might keep your taxable earnings below the threshold for child benefit tax for instance by paying into a pension.

Then there's the NI benefit potentially if through PAYE, as well as employer contributions of course, which I'm sure everyone would utilise.

I still think overall that pensions are one of if not the best place for money in the long term, but appreciate the benefit of not putting all eggs in one basket, especially if future governments decide to change the rules.

The other benefit of pensions is actually that you avoid the temptations that come with access to the money! Certainly for me that's helped build a pot that I probably wouldn't have otherwise.

Yeah, think I've covered a bit of that in various replies. It was more about choices of additional SIPP or ISA which was to compliment an existing work place pension, so NI savings wouldn't come into it. You only save on NI if it's salary sacrifice rather than just PAYE, which can't access if on a low wage that knocks you under min wage.
Workplace pensions come with employer contributions, so it's an effective wage cut if you do opt out of it.

Of course if you're a higher earner it makes more sense since you get higher levels of tax back or it can take you out of certain tax brackets that impact on other things. Once you earn £100k you also lose access to tax free childcare & free nursery hours. So savings on that can be massive.

For me personally, a SIPP would only be worth a 5% tax break, so think the ISA route is worth it as it gives you other options.

 

[Flip]

Does that also apply for anyone born after 1973?

I was born after 73, reading your link my existing pension may be protected at 55 but it's unclear to me.

One of my pensions is protected for 55 and its the reason its an outlier compared to my others which I consolidated - I nearly moved it into the main pot but my FA pointed out to check in case it was protected.

 

[JAZZMANB]

Ain't loving it myself tbh. Amen to the SDS device not knowing where to take you. Bear in mind that we deliver to edge of NY Moors, Harrogate and York inner city, which has loads of flats and independent living where you might have a 400 meter walk INSIDE the building.

The biggest concern though is the toll on a 62 year old body.

If I moved to the sticks ,I'd check a supermarket delivers first. No brainer if you're a bit remote

 

[Select coaches]

Surely this depends on a lot of things....eg if you are a higher rate taxpayer and getting 40% rebate but would be taking the pension out within the standard tax band in retirement you'd gain more than that overall. Even more so if paying into a pension stops your salary from reaching 100K+ threshold for even more tax. Or you might keep your taxable earnings below the threshold for child benefit tax for instance by paying into a pension.

Then there's the NI benefit potentially if through PAYE, as well as employer contributions of course, which I'm sure everyone would utilise.

I still think overall that pensions are one of if not the best place for money in the long term, but appreciate the benefit of not putting all eggs in one basket, especially if future governments decide to change the rules.

The other benefit of pensions is actually that you avoid the temptations that come with access to the money! Certainly for me that's helped build a pot that I probably wouldn't have otherwise.

This seems to have gone back and forth a lot:-

Assuming you get basic rate when you put it in and when you take it out, the tax benefit above isas is 5%

Again assuming basic rate in and out:-

Pension £80 in £20 tax relief 100% growth equals £200, you get out £150 x 80% = £120 + £50 lump sum = £170

Isa £80 in 100% growth you get out £160

Difference = £10, which is 5%

 

[Matt Hopkins]

This seems to have gone back and forth a lot:-

Assuming you get basic rate when you put it in and when you take it out, the tax benefit above isas is 5%

Again assuming basic rate in and out:-

Pension £80 in £20 tax relief 100% growth equals £200, you get out £150 x 80% = £120 + £50 lump sum = £170

Isa £80 in 100% growth you get out £160

Difference = £10, which is 5%

I must just look at it a different way, to me the difference between getting £160 and £170 is 6.25%

 

[Select coaches]

I must just look at it a different way, to me the difference between getting £160 and £170 is 6.25%

5% of the £200 pot.

I think the 6.25% is if you base it in the net you put in

 

[YorkMackem]

If I moved to the sticks ,I'd check a supermarket delivers first. No brainer if you're a bit remote

Oh don't get me wrong, I completely understand that those who are vulnerable and in the sticks will use the service the most, it's just an utter ball ache in icy weather in the dark.

 

[JAZZMANB]

Oh don't get me wrong, I completely understand that those who are vulnerable and in the sticks will use the service the most, it's just an utter ball ache in icy weather in the dark.

I agree, I'm a model punter . Good access, leave at door and I chuck straight into my bags and on your way

 

[Edinburgh Black Cat]

One of my pensions is protected for 55 and its the reason its an outlier compared to my others which I consolidated - I nearly moved it into the main pot but my FA pointed out to check in case it was protected.

I think I've ballsed up mine by transferring it from workplace DC pension into a SIPP. I transferred c90% of it. Never mind I guess. Lesson learned, I'll leave the rest of it to accumulate in that original account. Hopefully that c10% will tide me by from 55-57.

 

[Joe Public]

Would like to think I’d have a total pot of around £1m including private pension and sake if all assets. Leave pension alone as long as possible, live off the same of assets to bridge the gap. Think around £30k a year would be enough. Want the choice to retire or wind back when I’m 58.

Nice plan but there’s always some event around the corner to set things back.

 

[TAD]

So I'm a lower rate tax payer and was advised by FA in a free consultation to go SIPP rather than S&S.
Was beginning to doubt this but doing a simple calculation of putting in 10k a year for 5 years and assuming 4% growth and only calculating the 25% of sipp being tax free, then I've worked out I'll be about 4.5k better off in a sipp. Over 10years that would be 9k better. That was quite quick working out but does it sound about right to you knowledgeable folks
Thinking that with hopefully more growth and possibly able to offset some of the remaining 75% of the sipp with my tax allowance then I'm thinking for me sipp is definitely financially better. We do have about money in S&S already as that was my original plan till speaking to the FA.
Hoping to go in between 8-10 years somewhere around 60 and bridging gap till I get state and civil service pension at 67. Could take working pension early but would like to plan on having option not to as you loose quite a bit (although this is a calculation I'll do nearer the time.)