Retirement

[42]

My missus has a DB pension with work. We also put into a SIPP in her name instead of saving elsewhere. The plan is to take the SIPP at 57, as tax free as possible, then the DB pension at 65.
So in that respect, its an additional 25% with the SIPP, unless I'm missing something?

You're missing that the DB pension will get clobbered for tax when you could pay less tax on it going early. When you look at it holistically its a bit swings & roundabouts as youre just swapping which pension youre choosing to pay tax on

 

[WHD]

You're missing that the DB pension will get clobbered for tax when you could pay less tax on it going early. When you look at it holistically its a bit swings & roundabouts as youre just swapping which pension youre choosing to pay tax on

There won't be any of the SIPP left when the DB pension kicks in, so how will it make a difference to the tax on it?
For context, the DB pension only allows AVCs as a separate DC pot, to be taken at the same time as the DB, so imo it was better to start a separate one that could be taken early.

 

[42]

There won't be any of the SIPP left when the DB pension kicks in, so how will it make a difference to the tax on it?
For context, the DB pension only allows AVCs as a separate DC pot, to be taken at the same time as the DB, so imo it was better to start a separate one that could be taken early.

State pension takes up your personal allowance

 

[WHD]

State pension takes up your personal allowance

Yeah, I understand that.

 

[Jesse The Body Ventura]

when you say tied to state pension, is it a DB pension that has reductions for taking early? If so, then the reductions are just because the pot is being spread over a longer period. And leaving it until SPA means youll pay more tax on that, and increase the chances of getting nowt as youre closer to death (or ill health & not being able to enjoy it)

Civil service pension. I do have a db pension but feel I may start taking that around 60.
Think I'll leave my 100k + cash isas where they are and just start a sipp.
Then any drawdown on my isa won't count towards my allowance.

 

[Matt Hopkins]

Civil service pension. I do have a db pension but feel I may start taking that around 60.
Think I'll leave my 100k + cash isas where they are and just start a sipp.
Then any drawdown on my isa won't count towards my allowance.

How old do you think you'll be when you retire? Will your DB and CS pension plus state pension be enough for you to live on?

 

[Edinburgh Black Cat]

So lets's say for example I have cash ISAs worth 6 figures and i can put in up to £60,000 per annum into a sipp and back date to a previous allowance. I'm assuming with the 25% boost by the government it should beat the best cash ISA rate? I guess the problem would be if stocks/ shares took a nose dive based on their high valuations at the moment?

I'd be very wary of giving up your ISA allowance to put it into a pension. ISAs are very useful tools alongside a pension, much more flexible. You have the option to put the ISAs into stocks and shares, so you should be comparing ISA and SIPP as tax wrappers not as different asset classes (i.e. Cash ISA v Stocks SIPP).


What's right for you will depend on the following questions:
- Are you a higher rate tax payer?
- Are you going to max your pension contributions between now and retirement?
- What is the total size of your pension pots? What income tax rate are you likely to pay when you start withdrawing?
- What age are you wanting to access your funds?

Knowing the answer to these will help determine whether moving ISAs into a SIPP is the right thing for you. And also whether it is a decision you need to make now, or one you can defer.
Edit: Just seen from the other thread that you're a higher rate tax payer looking to access at 58.

Weigh up the pros and cons of bringing forward you DB pension. A big factor will be what income tax rate you'll pay on either option.

 

[Darlo1973]

£131k

Always paid a large chunk into it, even in my early twenties

That's good going. Once you get above £100k, it's amazing how quickly your pot can increase as you enter the territory where your investment growth each year is bigger than your contributions - so your investments are making more money than you are from working. The first £100k is tough but the second one is a lot easier.

 

[Jesse The Body Ventura]

How old do you think you'll be when you retire? Will your DB and CS pension plus state pension be enough for you to live on?

I've got roughly another 8 years to go. Hard to say on the 2nd question, pension portal is currently goosed so I can't see any current projections especially if I retire earlier.
I'm also trying to determine when I'm likely to die to make sure I burn through as much as I can while I can

 

[The Great Soprendo]

Anyone have experience of moving abroad (with tax residency outside the UK) and drawing on UK pensions there?

Obviously will depend on the country and different tax regimes in each (would be within the EU, and citizenship/residency is not an issue). UK state pension can be drawn from most countries I believe, but private DC pensions may be a bit more complex.

It's just a consideration at this stage, and I suspect I'll need specialist advice, so any tips on where to get that would be great too.

 

[douggie]

Since I breached the 40% tax a good few years ago I’ve always used a SIPP to get my taxable income to the 20% max, my rationale is I can still life comfortably and hopefully see dividends later life with the SIPP.

 

[Matt Hopkins]

I've got roughly another 8 years to go. Hard to say on the 2nd question, pension portal is currently goosed so I can't see any current projections especially if I retire earlier.
I'm also trying to determine when I'm likely to die to make sure I burn through as much as I can while I can

Ok without knowing all the info. You say you will take the CS pension at 67 and let's say you will take the DB at 65, you have no SIPP but have £100k in cash ISA let's say you want to retire at 58. You don't really want to move out of cash
You could start a SIPP and either through other savings or moving cash from the ISA (It can't be transferred) You're a 40% tax payer so everything you put in could get the 40% uplift or whatever term you wish to use.
To get £100k in the SIPP would, cost you £60k. That £100k would, virtually give you 6 years @ £17k tax free, I've ignored any growth. Once the DB starts you can just adjust the amount taken from the SIPP to keep you under the threshold, if the DB is above the tax allowance then happy days as with that and the CS plus state pension you'll have a great retirement.
There's loads of other things to consider but it's just to give you an idea.
My main point is don't use just your cash if you pack in early as you're missing out on using your tax allowance.
If you are risk averse you can always put it into a STMM in a SIPP

 

[Jesse The Body Ventura]

Thanks Matt

 

[Kobayashi]

Anyone have experience of moving abroad (with tax residency outside the UK) and drawing on UK pensions there?

Obviously will depend on the country and different tax regimes in each (would be within the EU, and citizenship/residency is not an issue). UK state pension can be drawn from most countries I believe, but private DC pensions may be a bit more complex.

It's just a consideration at this stage, and I suspect I'll need specialist advice, so any tips on where to get that would be great too.

Interested in your query too, same boat. I'm in Ireland but still have all my old UK bank/credit accounts. Will get a small UK DC pension, a reasonable UK DB one and full UK state pension plus 70% Irish state pension along with a good Irish DC pension.

Not been for professional advice yet, need to get my arse in gear!

 

[Mantobar]

Wondering what to do been offered 2 days around 8500k a year but my tax is 4750L because of the car
20% straight to tax man from about 4k plus bonuses
Hardly seems worth it

 

[Shambo]

£131k

Isn't that below average for the age rather than above?

That's what i have been trying to understand with my own and based on info on the WWW I think I am quite a bit behind

 

[Darlo1973]

Isn't that below average for the age rather than above?

That's what i have been trying to understand with my own and based on info on the WWW I think I am quite a bit behind

The average (median) pot size is way less than you might think

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Of course a lot of people get into their 40s and 50s (or even 60s) without a penny in their private/workplace pensions are are entirely dependant on the state pension. The people you know and work with may have a lot more but that doesn't make them representative of the population as a whole.

 

[JAZZMANB]

Yeah, but were talking SIPPs & AVCs which are over & above normal work place pension. So your normal workplace pension will be taking the personal allowance anyway. So for most of the additional money, its just a 5% tax saving from the 25% tax free bit for standard rate payers

Not if your ( ex ) workplace pot is not being taken and is in drawdown untouched.
I've just did my self assessment for last year . 1 full year since I finished working. No income tax paid .

 

[gazza.1990]

Only 36 but an early glimpse at retirement life with a week off work on my own with nowt really planned other than doing what i want to do.

Tuesday jetwashed the entire garden and front driveway.

Wednesday repainted the decking rails and fences and setup a gas fire pit that we actually bought last year and never got round to sorting it.

This morning chilled in the hot tub with a coffee, out for lunch with me mother later on then got some flowers to plant and replace last years dead ones.

Tomorrow is to be the extreme lazy and relax day.


I don't wish my life away, but work really does get in the way of everything and adds stress.

 

[faith brothers]

Only 36 but an early glimpse at retirement life with a week off work on my own with nowt really planned other than doing what i want to do.

Tuesday jetwashed the entire garden and front driveway.

Wednesday repainted the decking rails and fences and setup a gas fire pit that we actually bought last year and never got round to sorting it.

This morning chilled in the hot tub with a coffee, out for lunch with me mother later on then got some flowers to plant and replace last years dead ones.

Tomorrow is to be the extreme lazy and relax day.


I don't wish my life away, but work really does get in the way of everything and adds stress.

Pity you will have to wait till 70 or so to get state pension mind not to piss on your chips!