Pensions

[Odd socks]

Unless you want your loved ones to benefit.

In what way do you mean.

 

[alan__mcfc]

Yep its fucked me over good and proper. It changes on the 6 April 2028 as I reach 55 on the 19 April 2028. Whilst I dont necessarily need it at 55 its would have been nice to have access should I need it or decide Ive had enough of the corporate bullshit.

Some schemes have a protected pension age which will still allow benefits to be taken at age 55. You can ask your provider if it applies to the scheme you are in.

 

[RobMCFC]

Great if you know when your last day is.

I have a close friend who's got a substantial "pot". Chatting to him the other day, his pot is up £300k+ over this year alone. He has drawn down £200k this year so he's still £200k+ up on the year. Of course his tax paid is massive too. Overall he's been living on drawdown for 9 years and he's still got 15% more capital than when he started. The figures are high for him but the principle is still the same, that the older you get, if your FA is doing his job, it's relatively easy to live off the yield and dividends without eating into the capital. Also, the more you have the less risk you need to take to generate a decent income.

I suppose if you have a large amount in your pot, it is harder to spend (nice problem to have, mind).

I’ve sacrificed silly-level pension contributions to live in the here and now, so accept that my pot will be a lot smaller.

Don’t get me wrong, it will probably be larger than the UK average, but my income in retirement will definitely be: state pension + yield + (£5K to £10K).

 

[VOOMER]

In what way do you mean.

The DB (super annuation), usually pay 50% of the annual pension to spouse and that's it.
If you have other DC (defined contributions) schemes you could place them in an open ended scheme and just leave them.
They would continue to grow (in theory), till you pop your clogs.

 

[hampshireblue]

Very pleased with the performance of my pot this year. Up 13% on a moderately cautious risk level.

 

[dickie davies]

Very pleased with the performance of my pot this year. Up 13% on a moderately cautious risk level.

I posted this yesterday in the FTSE thread

Like you, I'm invested into funds and as Aviva properly messed up the statement in March on one of my policies, I have to go back 21 months or six months to calculate an approx increase
Starting with the policy value and adding my contributions gives me a sum vs what it's worth today
The incorrect statement one is 33% up from March 24 and 10% up from June this year
My second policy is 27% up on March this year

 

[Gareth Barry Conlon]

In what way do you mean.

I think he's getting at the different treatment when you pop off.

Older schemes of various types have a wide range of provisions for any relatives / dependents. In the worst case they get nothing.

A typical modern DB scheme or sipp leaves the full value of the pot as part of your estate.

 

[hampshireblue]

I posted this yesterday in the FTSE thread

Thanks. A good perfomance for you too. I only have funds and bonds, no individual stocks in my SIPP. I also have 3 years' worth of future income held in a cash fund within the SIPP. That way my drawdown is taken from there and I'm not worried about any major market falls-at least for 3 years anyway.

 

[Gareth Barry Conlon]

Very pleased with the performance of my pot this year. Up 13% on a moderately cautious risk level.

I posted this yesterday in the FTSE thread

I don't have numbers from the start of the year but when I started the thread in July I had 380k. I'm now on 430k, 6k of that is my contributions so ignoring that it's a 12% increase in 6 months.

All good but as I've said on here numerous times the rate of growth over the last 2-3 years is totally unsustainable and there are massive red flags.

However it's not like prior bubbles. In past times you could jump from over priced equity to government bonds as a safe haven. Right now Trump is trashing the value of the dollar and therefore US treasury's, the default low risk asset of the financial system, are losing value as much as they are paying interest. So investors know there is a bubble but they have nowhere to go. Accept maybe gold and precious metals, which are now also massively overpriced. Can it go on like this? As Mick McCarthy said - it can.

 

[hampshireblue]

I don't have numbers from the start of the year but when I started the thread in July I had 380k. I'm now on 430k, 6k of that is my contributions so ignoring that it's a 12% increase in 6 months.

All good but as I've said on here numerous times the rate of growth over the last 2-3 years is totally unsustainable and there are massive red flags.

However it's not like prior bubbles. In past times you could jump from over priced equity to government bonds as a safe haven. Right now Trump is trashing the value of the dollar and therefore US treasury's, the default low risk asset of the financial system, are losing value as much as they are paying interest. So investors know there is a bubble but they have nowhere to go. Accept maybe gold and precious metals, which are now also massively overpriced. Can it go on like this? As Mick McCarthy said - it can.

Time to lock in some of the increase?

 

[SCEtoAUX]

I've just opened a SIPP at 62 years of age (typo previously said 2), because with my existing pension and my self-employed work I've now got enough income to pay 40% tax on some of it, and I'm not doing that.

Will keep putting the excess into the SIPP for a couple of years whilst I'm still enjoying the self-employed work, then gradually draw down from it when I'm getting my state pension at 67 to give me income that sits a couple of pounds under the 40% threshold.I'll still be paying 20% on it but that's better than 40%.

I can take 25% of it tax free too.

 

[hampshireblue]

I've just opened a SIPP at 2 years of age, because with my existing pension and my self-employed work I've now got enough income to pay 40% tax on some of it, and I'm not doing that.

Will keep putting the excess into the SIPP for a couple of years whilst I'm still enjoying the self-employed work, then gradually draw down from it when I'm getting my state pension at 67 to give me income that sits a couple of pounds under the 40% threshold.I'll still be paying 20% on it but that's better than 40%.

I can take 25% of it tax free too.

How old? ;-)

 

[Kompany Car]

Whilst we are a good number of years away (2029) from the changes to salary sacrifice which may or may not materialise in their current form, does anyone know what they will do with previous unused allowances which I understand go back up to 3 years ? Yes I know its only a small percentage extra for the employee but Im lucky to also get the businesses NI saving also paid in which will go to the wall once it comes in.

So for instance the current limit for pension contributions is 60k, if in 2028 I use 40k of my pension contribution limit leaving 20k, will the unused amounts that are carried over to 2029 be dealt with under the new rule thereby removing the NI kick back I currently get or under the old rule that was in force in 2028 where I would still get it.

 

[Blue Since 76]

Whilst we are a good number of years away (2029) from the changes to salary sacrifice which may or may not materialise in their current form, does anyone know what they will do with previous unused allowances which I understand go back up to 3 years ? Yes I know its only a small percentage extra for the employee but Im lucky to also get the businesses NI saving also paid in which will go to the wall once it comes in.

So for instance the current limit for pension contributions is 60k, if in 2028 I use 40k of my pension contribution limit leaving 20k, will the unused amounts that are carried over to 2029 be dealt with under the new rule thereby removing the NI kick back I currently get or under the old rule that was in force in 2028 where I would still get it.

You're assuming they thought through the rules they announced...

It's still not clear what happens if you retire at 55 and are not 57 by the time the retirement age changes. Unless you've got a protected retirement age in your pension plan, and many don't, you may not be able to continue accessing your pension until you reach 57.

 

[west didsblue]

I think he's getting at the different treatment when you pop off.

Older schemes of various types have a wide range of provisions for any relatives / dependents. In the worst case they get nothing.

A typical modern DB scheme or sipp leaves the full value of the pot as part of your estate.

I’m in a DB scheme that pays out a lump sum when I croak and a 50% pension to Er indoors if she lasts longer than me. I was under the impression it doesn’t count as part of my estate for IHT.

 

[hampshireblue]

I’m in a DB scheme that pays out a lump sum when I croak and a 50% pension to Er indoors if she lasts longer than me. I was under the impression it doesn’t count as part of my estate for IHT.

Defined Benefit (DB) schemes will be impacted by upcoming Inheritance Tax (IHT) changes in the UK, with most death benefits, like lump sums, becoming part of the estate for IHT from April 2027, though dependant's scheme pensions generally remain IHT-exempt, unlike many Defined Contribution (DC) benefits. These reforms aim to treat pensions more like other assets, making unused pension funds and certain lump sums (like 5-year guarantees) subject to IHT, shifting responsibility from scheme administrators to personal representatives and beneficiaries, say Sackers and Eversheds Sutherland.
Key Changes for DB Schemes (from April 2027)

• In Scope for IHT:
  • Lump Sum Death Benefits (LSDs): Generally, lump sums paid out on death (like those from a "death in deferment" period or 5-year guarantees) will be included in the estate for IHT.
• Generally Out of Scope for IHT:
  • Dependant's Scheme Pensions: A pension paid as a regular income to a dependant (spouse, civil partner, children) remains outside IHT, as long as it's solely for providing that scheme pension, notes GOV.UK and Arc Pensions Law.

 

[Rory Bluelow]

How old? ;-)

Clearly an infant of some enterprise and with tremendous foresight!

 

[west didsblue]

Defined Benefit (DB) schemes will be impacted by upcoming Inheritance Tax (IHT) changes in the UK, with most death benefits, like lump sums, becoming part of the estate for IHT from April 2027, though dependant's scheme pensions generally remain IHT-exempt, unlike many Defined Contribution (DC) benefits. These reforms aim to treat pensions more like other assets, making unused pension funds and certain lump sums (like 5-year guarantees) subject to IHT, shifting responsibility from scheme administrators to personal representatives and beneficiaries, say Sackers and Eversheds Sutherland.
Key Changes for DB Schemes (from April 2027)

• In Scope for IHT:
  • Lump Sum Death Benefits (LSDs): Generally, lump sums paid out on death (like those from a "death in deferment" period or 5-year guarantees) will be included in the estate for IHT.
• Generally Out of Scope for IHT:
  • Dependant's Scheme Pensions: A pension paid as a regular income to a dependant (spouse, civil partner, children) remains outside IHT, as long as it's solely for providing that scheme pension, notes GOV.UK and Arc Pensions Law.

Thanks Hants.

 

[kaz7]

I have big decisions to make next month as i have had all the letters about my small private pensions that are ready to take, my brain is not sharp enough now to decide so will have to take advice, if i take them then it affects my benefits and the tax stuff so it is not straight forward by any means, i am worried that i will get a crooked financial advisor and get scammed !

 

[Blue Since 76]

I have big decisions to make next month as i have had all the letters about my small private pensions that are ready to take, my brain is not sharp enough now to decide so will have to take advice, if i take them then it affects my benefits and the tax stuff so it is not straight forward by any means, i am worried that i will get a crooked financial advisor and get scammed !

Have a look at this. Gives some advice on what to look for in an advisor from an advisor. There will be other useful bits across his various YouTube videos or podcasts, but this was the first one of his I found and can be trusted in his suggestions, not least as his usual advice is most people don't need an advisor (although sounds like you're at the level of complexity where it's probably worth it)