New Pension Rules

[hashluck]

Hashluck you are clearly someone that’s credible and can give pointers (not advice) to assist many on here.
By the way your “taking the lot “ comment interests me- unless you’re 40ish

Me? I know nothing and you are correct about giving pointers not advice. Everyone is different with different circumstances. I am mid 50s, I could drawdown my pension but I have reasons to want to continue to contribute. Once those reasons no longer exist I will look to take all the money as a lump sum and pay the resultant tax. I want control of it and figure I can make it work harder or, if not, at least better for me personally.

 

[Wattie]

Me? I know nothing and you are correct about giving pointers not advice. Everyone is different with different circumstances. I am mid 50s, I could drawdown my pension but I have reasons to want to continue to contribute. Once those reasons no longer exist I will look to take all the money as a lump sum and pay the resultant tax. I want control of it and figure I can make it work harder or, if not, at least better for me personally.

Hallelujah;
Smart money.
I think we’re on the same Level.

 

[Scaf]

Forgive me if this is a silly question, but how do they work out the £1m life time allowance if you have a final salary scheme

 

[Ebenezer]

Forgive me if this is a silly question, but how do they work out the £1m life time allowance if you have a final salary scheme

From interweb

For defined benefit pension schemes, you calculate the total value by multiplying your expected annual pension by 20. In addition, you need to add to this the amount of any tax-free cash lump sum if it is additional to the pension. In many schemes, you would only get a lump sum by giving up some pension, in which case the value of the full pension captures the full value of your payouts. So you are likely to be affected by the lifetime allowance in 2020-21 if you are on track for a final salary pension (with no separate lump sum) of more than £53,655 a year.

Eb

 

[Motorsport3]

Y

I know I keep harping on.
Look at your “managed fund” return pa.
Compare to Gold.
Which did better?

I also know lots of men who retired and died. I suggest semi retirement.

I don't think gold should be seen as alternative to a pension but better as part of a pension pot.

 

[rockits]

I agree. I think control is becoming more and more important.

I agree 100% today and likely tomorrow for some time. To have your money or assets anywhere outside of your control is very risky IMHO with all the unscrupulous scum (hard word but actually accurate!) that floats about these days.

It doesn't make sense for me to have a company pension as it is my company and I still pay all contributions all ways regardless of how tax efficient. With the current climate and even not....at 47 I don't want to be tying up decent chunks of cash not being able to release it until 55+. I want it to work as hard as it can returning as much as it can.

I am still trading a fair bit and still doing OK. Still making loads of mistakes and still missing out on lots of opportunities. However still making very good returns. My trading pot has doubled from £70k>£140k since end March. I am not sure there is a pension on the planet offering returns like that. This is also very liquid, in my control and not subject to any income tax.

Got to keep on working hard to keep the money working hard but I am not anticipating or planning on single penny from the state when I need it.

 

[Scaf]

not subject to any income tax.

Do you not have to pay capital gains?

 

[Scaf]

From interweb

For defined benefit pension schemes, you calculate the total value by multiplying your expected annual pension by 20. In addition, you need to add to this the amount of any tax-free cash lump sum if it is additional to the pension. In many schemes, you would only get a lump sum by giving up some pension, in which case the value of the full pension captures the full value of your payouts. So you are likely to be affected by the lifetime allowance in 2020-21 if you are on track for a final salary pension (with no separate lump sum) of more than £53,655 a year.

Eb

I am screwed then ....

 

[rockits]

Do you not have to pay capital gains?

All wrapped in investment ISA's at the moment.

 

[Scaf]

All wrapped in investment ISA's at the moment.

I should really go see an IFA as I a, sure I could make my money work better for me, especially from a tax on investments perspective, I thought there was a limit on how much you could put in an ISA in any one year, like 20k which you will ave exceeded due to your success on the markets.
I am most likely mistaken though.

 

[Simon1963]

Like doodlebug I also recommend retirement as soon as you can.
I also concur that a company pension is a good vehicle.
These 2 points are totally different for each individual and you must cut your cloth.
However my experience tells me you don't need as much money as you think to retire in some sort of comfort (again individual).
I don't know if I would take the lot in one go though.
I self manage my funds and am still losing dosh, I know several people that have a managed portfolio and they all have recovered their money following Covid so may be worth thinking about.
I did a *** packet calculation as to how much I would need for my retirement. Some were wild guesses (how long would I live) others more educated (cost of a few holidays, one or two more cars, monthly outgoings)
Anyway I arrived at a figure and built in contingency. Pleased to say it is going well.
I have been retired many years now almost as long as I have been working but in that time I was a carer which counts as a job and that got me over the very difficult change of life from working to retiring.
Men must have something to do following retirement or you die

Myself and my wife both turned 55 in 2018 and had reasonable pensions. The kids are off our hands so we decided to downsize the house and take the 25% tax free. We take a drawdown. It’s surprising, without a mortgage car loans etc, how little you need to live on per month. I’ve spent the last 18 months totally renovating our house and my wife has a work contact for the winter months. I myself will work the winter months when the house is finished and we will travel in the spring/summer. I have thought about taking money out of the pension to have a go at the markets myself but I’m s*^t scared of loosing it all.

 

[Wattie]

[

I should really go see an IFA as I a, sure I could make my money work better for me, especially from a tax on investments perspective, I thought there was a limit on how much you could put in an ISA in any one year, like 20k which you will ave exceeded due to your success on the markets.
I am most likely mistaken though.

Don't expect many to have a clue....especially on the investment side. They'll put you in a range of funds and forget about you.

 

[daverichardson]

Myself and my wife both turned 55 in 2018 and had reasonable pensions. The kids are off our hands so we decided to downsize the house and take the 25% tax free. We take a drawdown. It’s surprising, without a mortgage car loans etc, how little you need to live on per month. I’ve spent the last 18 months totally renovating our house and my wife has a work contact for the winter months. I myself will work the winter months when the house is finished and we will travel in the spring/summer. I have thought about taking money out of the pension to have a go at the markets myself but I’m s*^t scared of loosing it all.

Yes me too, I have started my 11th room renovation in the house today (started in Feb!)
The house needed updating after neglect, was cheaper than moving (did not know about stamp duty holiday at the time) and was better than leaving the dosh earning 0.3% in a bank. No regrets
I have a nice place again where I want to live and have improved the value of the house. A few hiccoughs along the way which was part of the fun. With me not spending much socially due to the virus I have not dented my savings/investments too badly. All in all it was the right thing for me to do.
Look after each other - or I will send the boys around

 

[rockits]

I should really go see an IFA as I a, sure I could make my money work better for me, especially from a tax on investments perspective, I thought there was a limit on how much you could put in an ISA in any one year, like 20k which you will ave exceeded due to your success on the markets.
I am most likely mistaken though.

I'm sure there are good IFA's but suspect many will be average at best. It is getting someone that cares and goes that extra mile and not really any different to most industries.

I tend to find I am generally fairly able at most things. Often better than getting someone whose day job it actually is. However of course there are zillions of people who are far better at myself doing their day job.....it is just finding them.

You can put £20k per annum you and wife so £40k per annum. I had 2 years worth added a few years back in a cash ISA doing nothing so transferred it all to an Investment ISA with IG to allow me to make it work hard by investing/managing it myself.

I am far from useless but far from an expert but have made circa 10% return every month and more so far. Hopefully as the pot grows the percentage required to return a decent figure becomes easier. I've done loads of spread betting on commodities/Forex as well and keep nicking profit there as well.

It really wouldn't be difficult to beat a bank, fund or most off the shelf investments/funds doing it yourself in an Investment ISA.

 

[midlifecrisis]

I found this and it might be useful for some here.

Home - PLSA - Retirement Living Standards

Home - The Retirement Living Standards have been developed to help us to picture what kind of lifestyle we could have in retirement.

www.retirementlivingstandards.org.uk

 

[gb-gta]

This is why annuities are so hopeless.
With rates of 3k Income per 100k of fund, give or take (probably take), You need about 1.5 million in your pot for the 45k/year ‘comfortable’ or 900k just to be moderate.

 

[Ebenezer]

I am screwed then ....

As I understand the rules, you'll be paying 55% tax on a portion of the income...
Eb

 

[Scaf]

As I understand the rules, you'll be paying 55% tax on a portion of the income...
Eb

I guess so, on the plus side at least I will have the pension income on which to pay the tax, many won’t.
I cashed small pension worth 100k last year to invest in a family property (providing equity release for the in-laws) which will eat into the allowance and I have two final salary schemes which combined are expected to produce a decent sum and well I to the current higher income tax bracket, both schemes are currently fully funded.
I don’t contribute to a scheme at the moment but put Max money into my wife’s small scheme (she does not work) and into property.
At some point I will need to work out how to exit the properties without having my pants pulled down.

 

[BillyBob]

You need to talk to the people looking after your two final salary schemes. Depending on when you joined them and left them, the rules could be very different. It's not an area I've fully researched, as it's not relevant to me, but I do know people who have a lifetime allowance of £2M. I THINK 1989 is a relevant date - if you joined a scheme before then, you might be lucky.

 

[jonny]

It is very complicated (stating the obvious I know). For example, the lifetime allowance had been higher in the past (eg it was £1.8m ten years ago) but you could elect to fix it, so you wouldn't suffer if it was later reduced (which of course it was...I think the lowest it went to was £1m a couple of years ago). But you could make no more contributions if you so elected (well I am simplifying because there were actually two ways to do this "protection" and treatments were different - I said it was complicated!). You need a clear mind and/or professional advice to understand all the ins and outs. Even the statement that annuities are no good is not entirely clear, since it is a function of interest rates/yield curves and actuarial mortality analysis. Eg smokers or those with health conditions such as high blood pressure get more per annum than those who don't...