Retiring

[Invisible Man's Bandage]

Stupid question please... I am going down the drawdown route for a company pension that will top up our existing MOD and NHS pensions.... SWMBO wants to take the 25% tax free amount "because we can" even though we don't strictly need it as we have liquid assets for a rainy day...

Any thoughts on whether the 25% tax free is a no-brainer or will the larger lump sum give us more in return over time?

I took redundancy from my old company in 2005 aged 51 after 28 years of paying into a final salary pension scheme. As part of my package, the company paid for an independent financial advisor to go over my financial situation. At that time you could take your company pension at 50 but he advised me to wait to see what job I got next before deciding whether to or not. He was right as I got a better paid job (which I'm still in). The main thrust of what he advised was that you should always take the maximum 25% tax free lump sum and this is what I did when I had to take my pension at 65.

 

[Citizen of Legoland]

Stupid question please... I am going down the drawdown route for a company pension that will top up our existing MOD and NHS pensions.... SWMBO wants to take the 25% tax free amount "because we can" even though we don't strictly need it as we have liquid assets for a rainy day...

Any thoughts on whether the 25% tax free is a no-brainer or will the larger lump sum give us more in return over time?

I'm not too sure about the advice you've received - sorry chaps - I think it depends on your personal circumstances and attitude to risk. I don't see the point of taking your lump sum in one go now if you don't need it. If you decide to invest it, are you going to choose a riskier option than your current fund, as this is the only reason to withdraw it in my opinion if you're not spending it straightaway, say put your income drawdown (remaining 75%) in a low-to-medium risk fund and invest the 25% in a medium-to-high risk investment.

Can I take a lump sum from my pension? - Which?

You can take a tax-free lump sum from your pension when you turn 55. We explain how the rules work and what to consider before accessing your money in this way.

www.which.co.uk

With more people now choosing the greater flexibility of income drawdown, there’s an argument for keeping your pot intact to enable maximum future investment growth.

Read more: https://www.which.co.uk/money/pensi...a-lump-sum-from-my-pension-a7ch15b2sgly#UFPLS - Which?

 

[Chippy_boy]

What's the current thinking on the size of pot you need? Is it still 25x your desired annual gross income? Or have the pitiful returns over recent years thrown that out of the window?

 

[jaseirai]

What's the current thinking on the size of pot you need? Is it still 25x your desired annual gross income? Or have the pitiful returns over recent years thrown that out of the window?

4% is doable when income investing but I'm factoring in 3.5 after fees these days to be safe. Any sort of fixed income product looks unwise at the moment due to RPI being abolished in 2030 plus potential inflation.

 

[Chippy_boy]

4% is doable when income investing but I'm factoring in 3.5 after fees these days to be safe. Any sort of fixed income product looks unwise at the moment due to RPI being abolished in 2030 plus potential inflation.

So for £50k gross, I'd need £1.4m in the pot you reckon? Ouch.

 

[abu13]

My retirement plan has changed to lumping as much as I possibly can into my pension and investments, Get to an age where I feel I can no longer work and see what my pot is.

Put enough money one side for a ticket and appointment with Dignitas and then see how long it lasts for.

 

[Blue Maverick]

If you were in the armed forces or worked in the public service you might not get as much as expected
I was in the Navy for 8 years & NHS for 31 years plus i was self employed for 6
I started work at 15 and apart from 6 month out of work i worked till i was 60 when made redundant from NHS
Was entitled to state pension aged 66
Because the NHS opted out of SERPS i only get £599 a month state pension God help people who wont get it for another 10 years or so

In the fire service we only found this out a few years ago, nobody knew we were paying less in NI than we should’ve been! That’s now been rectified however I’m way to near retiring for me to gain anything for it. You can go on the government website to see how many years youve contributed, currently you need to do 35 years and it will give you a projection for your state pension. Interestingly I found out I went into 6th form at 16 years old and the government pays your stamp! I thought I hadn’t made 35 years but I have thanks to that.

 

[abu13]

In the fire service we only found this out a few years ago, nobody knew we were paying less in NI than we should’ve been! That’s now been rectified however I’m way to near retiring for me to gain anything for it. You can go on the government website to see how many years youve contributed, currently you need to do 35 years and it will give you a projection for your state pension. Interestingly I found out I went into 6th form at 16 years old and the government pays your stamp! I thought I hadn’t made 35 years but I have thanks to that.

I need to find out more about this SERPS lark, I think I was about 18 when some guy came round to the place I worked and went through the benefits of opting out of SERPS. Being young and basically not having a clue I went with the crowd and opted out. Now I am 52 years old and have only ever been out of work for 3 weeks since I was 16. Therefore I believe I have the full 35 years in place and I absolutley will have by the time I retire in 15 years time.

However, I believe the current state pension is £190 a week. Do you still get this if you have opted out of SERP's?

 

[Blue Maverick]

I need to find out more about this SERPS lark, I think I was about 18 when some guy came round to the place I worked and went through the benefits of opting out of SERPS. Being young and basically not having a clue I went with the crowd and opted out. Now I am 52 years old and have only ever been out of work for 3 weeks since I was 16. Therefore I believe I have the full 35 years in place and I absolutley will have by the time I retire in 15 years time.

However, I believe the current state pension is £190 a week. Do you still get this if you have opted out of SERP's?

Like I said mate check https://www.gov.uk/check-state-pension
I think when I checked the weekly pension was £160 and I would only get £135, quite a difference and unfortunately buying back is not worth it. I just assumed I was paying the right amount, somebody has fucked up and now we are paying the cost.

 

[RobMCFC]

In the fire service we only found this out a few years ago, nobody knew we were paying less in NI than we should’ve been! That’s now been rectified however I’m way to near retiring for me to gain anything for it. You can go on the government website to see how many years youve contributed, currently you need to do 35 years and it will give you a projection for your state pension. Interestingly I found out I went into 6th form at 16 years old and the government pays your stamp! I thought I hadn’t made 35 years but I have thanks to that.

Yes, it’s a useful site and sometimes it’s a nice surprise. I was credited with years when I was at Manchester Poly and I’ve worked full-time since 1990 so I’ll be OK for the 35 years.

Given that my wife quit her job when our eldest daughter was born, I was worried that she’d not get much, but you get a credit for every year you claim child benefit, so she’ll qualify for about 80%, which is a lot more than we thought.

Still, a good 15 years until state pension to go but we’re trying to put a bit more in my work pension and maybe opening a small Vanguard SIPP for her to top things up.

 

[denislawsbackheel]

In the fire service we only found this out a few years ago, nobody knew we were paying less in NI than we should’ve been! That’s now been rectified however I’m way to near retiring for me to gain anything for it. You can go on the government website to see how many years youve contributed, currently you need to do 35 years and it will give you a projection for your state pension. Interestingly I found out I went into 6th form at 16 years old and the government pays your stamp! I thought I hadn’t made 35 years but I have thanks to that.

They stopped credits for school attendance a long time ago.

I need to find out more about this SERPS lark, I think I was about 18 when some guy came round to the place I worked and went through the benefits of opting out of SERPS. Being young and basically not having a clue I went with the crowd and opted out. Now I am 52 years old and have only ever been out of work for 3 weeks since I was 16. Therefore I believe I have the full 35 years in place and I absolutley will have by the time I retire in 15 years time.

However, I believe the current state pension is £190 a week. Do you still get this if you have opted out of SERP's?

opting out was not an individual decision.it was done at employer level. The current state pension Max is £175.20 a week.

 

[rowarta]

also note unless your IP14/IP16 with HMRC, if your lucky to have a pot over £1,073,100 (current lifetime allowance) anything above that amount and you'll be getting taxed at 55%

 

[denislawsbackheel]

Yes, it’s a useful site and sometimes it’s a nice surprise. I was credited with years when I was at Manchester Poly and I’ve worked full-time since 1990 so I’ll be OK for the 35 years.

Given that my wife quit her job when our eldest daughter was born, I was worried that she’d not get much, but you get a credit for every year you claim child benefit, so she’ll qualify for about 80%, which is a lot more than we thought.

Still, a good 15 years until state pension to go but we’re trying to put a bit more in my work pension and maybe opening a small Vanguard SIPP for her to top things up.

Your wife is not credited NI for every year of child benefit. She is credited until the youngest child is 12.

 

[denislawsbackheel]

Like I said mate check https://www.gov.uk/check-state-pension
I think when I checked the weekly pension was £160 and I would only get £135, quite a difference and unfortunately buying back is not worth it. I just assumed I was paying the right amount, somebody has fucked up and now we are paying the cost.

Buying missing years is very definitely worth it!
You can buy up to the last 6 years and will be in profit within 3 years of drawing your state pension for each year you buy.

 

[jaseirai]

So for £50k gross, I'd need £1.4m in the pot you reckon? Ouch.

Someone here aiming for 50k and he's got close to 2m.

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[abu13]

They stopped credits for school attendance a long time ago.

opting out was not an individual decision.it was done at employer level. The current state pension Max is £175.20 a week.

Yeah, im getting all my numbers mixed up, i was thinking the state pension was £9k a year not £190 a week.

 

[Blue Maverick]

Buying missing years is very definitely worth it!
You can buy up to the last 6 years and will be in profit within 3 years of drawing your state pension for each year you buy.

I’ve missed 32 years effectively, I’d have to have a serious look at it and crunch the numbers. I didn’t even know I got it for my school years until I checked.

 

[GornikDaze]

I need to find out more about this SERPS lark, I think I was about 18 when some guy came round to the place I worked and went through the benefits of opting out of SERPS. Being young and basically not having a clue I went with the crowd and opted out. Now I am 52 years old and have only ever been out of work for 3 weeks since I was 16. Therefore I believe I have the full 35 years in place and I absolutley will have by the time I retire in 15 years time.

However, I believe the current state pension is £190 a week. Do you still get this if you have opted out of SERP's?

If you qualify for the full state pension you’ll be getting £175.20 a week. You should have a statement every year from the provider you opted out of SERPS with - Prudential, Abbey Life etc were all popular when you were able to opt out in the late 80s. Opting out was stopped in 2012 I think, but if you stayed out for the maximum time you could have a decent lump tucked away. If you opted out via a company scheme you will have everything tied up in one pot - unless the scheme changed providers over the years which often happened

 

[abu13]

If you qualify for the full state pension you’ll be getting £175.20 a week. You should have a statement every year from the provider you opted out of SERPS with - Prudential, Abbey Life etc were all popular when you were able to opt out in the late 80s. Opting out was stopped in 2012 I think, but if you stayed out for the maximum time you could have a decent lump tucked away. If you opted out via a company scheme you will have everything tied up in one pot - unless the scheme changed providers over the years which often happened

I have absolutley no idea where this would be, the company i worked for has long since closed down. I do have a couple of pensions with Royal London but i don't believe they were anything to do with opting out of Serps.

No idea where to start with this one :(

 

[denislawsbackheel]

I have absolutley no idea where this would be, the company i worked for has long since closed down. I do have a couple of pensions with Royal London but i don't believe they were anything to do with opting out of Serps.

No idea where to start with this one :(

You can try to find lost pensions here

Find my pension: tracing and finding lost pensions | MoneyHelper

It’s not always easy to keep track of a pension, especially if you’ve changed scheme or employers. Discover how to find and trace any lost pensions.

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