Pensions

[DenisLawBackHeel74]

I’d be interested to see that vid!

I had the other end of the scale the other day in a conversation with a director at work, he wants to retire at 55 and had calculated he needed 9.6 million!

What kind of work is that? I’m assuming there’s been some equity ownership of the business as that figure sounds like he’s done a couple of rounds of PE…..

 

[denislawsbackheel]

I was very careful to make sure I paid my NI every year and then subscribed to work pensions throughout my working life. I also paid voluntary contributions as an insurance in case I need care towards the end of life, but hoped anything left over would help our offspring and grandkids benefit from anything left over. after retirement We spent the first ten years caring unpaid to support ill parents, and when they passed away there wasn’t much left. But we can probably muddle through, health permitting, but this Government is scaring us with every new policy, we are not rich but they seem to think people like us are.

What are they proposing that threatens your above mentioned goals?
Or is it just red top rag panic?

 

[SkyBlueFlux]

Life is short mate, why will you not be able to work when older ?

I have spina bifida - had a difficult childhood but have been blessed to live a relatively “normal” life over the last 20 years and have ticked off all the usual things - school, uni, marriage. But since the pandemic things took a sharp downward turn. I’ve gone from playing 5-a-side every week when I was 28, to needing a walking stick, to needing crutches, to now being in a wheelchair in the space of 6 years.

It’s not necessarily a terminal decline and if it was just mobility I might be able to manage but it goes deeper than that. The pain, the fatigue, the muscle weakness, getting my socks on feels like running a marathon these days, if I can do it at all.

I’m running on fumes just trying to keep going in this condition, even if things don’t get any worse, there’s no way I can sustain this lifestyle for another decade. More than anything it’s just bleak and eventually it will mentally take me down even if physically I’m still hanging in there.

I hope for the best, but I have to prepare for the worst.

 

[dickie davies]

I have spina bifida - had a difficult childhood but have been blessed to live a relatively “normal” life over the last 20 years and have ticked off all the usual things - school, uni, marriage. But since the pandemic things took a sharp downward turn. I’ve gone from playing 5-a-side every week when I was 28, to needing a walking stick, to needing crutches, to now being in a wheelchair in the space of 6 years.

It’s not necessarily a terminal decline and if it was just mobility I might be able to manage but it goes deeper than that. The pain, the fatigue, the muscle weakness, getting my socks on feels like running a marathon these days, if I can do it at all.

I’m running on fumes just trying to keep going in this condition, even if things don’t get any worse, there’s no way I can sustain this lifestyle for another decade. More than anything it’s just bleak and eventually it will mentally take me down even if physically I’m still hanging in there.

I hope for the best, but I have to prepare for the worst.

I feel for you mate
I've just had a knee operation and am struggling to do regular things we take for granted, putting socks on etc
I hope you don't deteriorate further or if there's any chance at all, see a bit of improvement

 

[SkyBlueFlux]

I feel for you mate
I've just had a knee operation and am struggling to do regular things we take for granted, putting socks on etc
I hope you don't deteriorate further or if there's any chance at all, see a bit of improvement

This is it mate - it’s the small things in life that make things a lot harder. Getting a train to be in the office and faffing with ramps etc. is a bit of a process but I can prepare myself for it. But if I want a coffee in the morning? Well that’s going to be 20 minutes of balancing shit while wheeling around. Getting socks on? Prepare for a fight. Get out of bed at night for a piss? Basically have to mentally prep for an obstacle course at 3am.

This stuff just stacks and wears you down. You find little ways to make it less painful, but then you add a 40 hour work week on top…

Thank you though, pal, I also try to stay optimistic that things might get more manageable with time. Anyway this is a bit off topic so will let people get back to talking about tax relief on SIPPs!

 

[HypnoticBlue]

This is it mate - it’s the small things in life that make things a lot harder. Getting a train to be in the office and faffing with ramps etc. is a bit of a process but I can prepare myself for it. But if I want a coffee in the morning? Well that’s going to be 20 minutes of balancing shit while wheeling around. Getting socks on? Prepare for a fight. Get out of bed at night for a piss? Basically have to mentally prep for an obstacle course at 3am.

This stuff just stacks and wears you down. You find little ways to make it less painful, but then you add a 40 hour work week on top…

Thank you though, pal, I also try to stay optimistic that things might get more manageable with time. Anyway this is a bit off topic so will let people get back to talking about tax relief on SIPPs!

I suffer chronic pain and nerve damage but I can only imagine a small percentage of what you are going through. Talk of pensions is somewhat secondary, so wishing you good look for the future and hopefully the Blues can take your mind off any issues and can continue to keep us all smiling.

 

[uptheblues]

I’m in the LGPS , considering AVC’s as a higher rate tax payer, can take them as a tax free lump sum when I retire , anyone who knows more than me can give any advise?

 

[Gareth Barry Conlon]

I’m in the LGPS , considering AVC’s as a higher rate tax payer, can take them as a tax free lump sum when I retire , anyone who knows more than me can give any advise?

I can give you some generic advice.

Anything you can pay into your pension pre tax is generally good as you would assume as a pensioner your income will be lower and your tax rate lower. So when you eventually draw it out you can assume a lower tax rate.

You can also withdraw up to 25% of your pension tax free. Assuming the scheme allows this. So pay in pre tax and drawdown tax free is a no brainer.

 

[Paladin]

If you've drawn your 25% tax free, is it possible to draw say another £10k out of your pension pot, but pay tax on it?

 

[dickie davies]

If you've drawn your 25% tax free, is it possible to draw say another £10k out of your pension pot, but pay tax on it?

I'm sure I'm correct is saying you can't just take a tax free lump from your pension
If you wanted £10k tax free, you have to draw 40k, the £30k balance is then subject to all sorts of tax rules
At the end if the day, the money is yours to do so as you wish. It's how to take it tax efficiently

 

[Paladin]

Ok, so here's an example. My pension pot has enough for me to take out some money for a new car costing £10k. I've used all my tax free amount though. Can I draw £15k from my pot, pay some tax on that amount, leaving me with more than £10k to buy the car?

 

[hampshireblue]

If you've drawn your 25% tax free, is it possible to draw say another £10k out of your pension pot, but pay tax on it?

Yes, of course. You can drawdown as much as you want whenever you want. Of course, only the first 25% is tax free. I drew down my 25% TFC a bit too quickly over about 7 years. With hindsight I would have spread it out a bit further to reduce my tax but you live and learn.

 

[hampshireblue]

I’m in the LGPS , considering AVC’s as a higher rate tax payer, can take them as a tax free lump sum when I retire , anyone who knows more than me can give any advise?

I think you can take them tax free but only within the overall 25% limit.

 

[Gareth Barry Conlon]

If you've drawn your 25% tax free, is it possible to draw say another £10k out of your pension pot, but pay tax on it?

I'm sure I'm correct is saying you can't just take a tax free lump from your pension
If you wanted £10k tax free, you have to draw 40k, the £30k balance is then subject to all sorts of tax rules
At the end if the day, the money is yours to do so as you wish. It's how to take it tax efficiently

My understanding is you can do whatever you like. You can draw it all on day 1. It's only individual scheme rules that might stop you. And in that case you can just transfer it to a sipp and then you make the rules.

And tax rules don't stop you doing things, they just bite you after the fact. Hence get good advice up front. But in this case, you would get 25% tax free and anything over counts as income on your tax return.

 

[Paladin]

Yes, of course. You can drawdown as much as you want whenever you want. Of course, only the first 25% is tax free. I drew down my 25% TFC a bit too quickly over about 7 years. With hindsight I would have spread it out a bit further to reduce my tax but you live and learn.

Thanks for this advice. I'm in a similar position, drawing my 25% but now needing another smaller amount from the remaining pot.

With interest though, the pot has remained at the original level, and that includes the 25% and 5 years of monthly drawings. My wife looks at the remaining pot (SIPP) and tries to convince me we don't want to die with that amount still in the fund. Also we will pick up our state pensions in 3 and 7 years, so that will reduce our reliance on the pension.

 

[Odd socks]

My only advice is to own your own home, not bothered if it's a mansion or a bedsit it will help you no matter what life decisions you have made on pensions.
My outgoings on the council tax/ water/ gas/ electric etc. is around £650 a month and state pension being about a grand, so not all singing and dancing but it's safe.
If your rent is coming in around £800 then you will be needing savings to cover the bills.
if you have a modest private pension and the state pension you hopefully will be fine if you are fortunate to have a place you own.
Everyone has their own journey and each will be different so don't get carried away dreaming of a rich and prosperous retirement when most of us will and should be content with comfortable and similar to the life we are living when working.
Getting back to my advice on owning your own home is similar to the pension pot, you don't need a mansion just a place to call your own.

 

[hampshireblue]

Thanks for this advice. I'm in a similar position, drawing my 25% but now needing another smaller amount from the remaining pot.

With interest though, the pot has remained at the original level, and that includes the 25% and 5 years of monthly drawings. My wife looks at the remaining pot (SIPP) and tries to convince me we don't want to die with that amount still in the fund. Also we will pick up our state pensions in 3 and 7 years, so that will reduce our reliance on the pension.

She's right. I've been drawing down for 8 years, it's our only source of income and it's got nearly 15% more now than when I retired. I recently did an additional big drawdown as I'm happy we're not going to run out of money. I'm very fortunate that it's a fairly good pot but the principle is the same about dying with too much left! Don't be afraid to actally spend some of the original pot rather than just the yield.

 

[Bluemanc100]

If you've drawn your 25% tax free, is it possible to draw say another £10k out of your pension pot, but pay tax on it?

Yes… you can take whatever you like out of a drawdown pot and pay the appropriate rate of tax..

I’d recommend doing it in March so it doesn’t totally f*** up your tax

 

[Bluemanc100]

She's right. I've been drawing down for 8 years, it's our only source of income and it's got nearly 15% more now than when I retired. I recently did an additional big drawdown as I'm happy we're not going to run out of money. I'm very fortunate that it's a fairly good pot but the principle is the same about dying with too much left! Don't be afraid to actally spend some of the original pot rather than just the yield.

That’s the hard part of being retired for me.. getting your head around spending your savings when you’ve done the opposite for so many years

 

[hampshireblue]

That’s the hard part of being retired for me.. getting your head around spending your savings when you’ve done the opposite for so many years

I think a lot depends on your age and other commitments but it's certainly a different mindset. For me, the longer I've been retired the easier it gets.