Pensions

[flook]

I think the average life expectancy was 66,so one year after getting the pension, it is now 78 so 12 years after.

ah ok that makes more sense, me being a bit dumb there I think :)

 

[hampshireblue]

ah ok that makes more sense, me being a bit dumb there I think :)

Join the club.

 

[M18CTID]

Isn't the discussion mainly about private pensions though? People with private pensions losing out on a state pension because they have a private one?

Not sure to be honest! I just saw the poster mention something about all the parties looking to get rid of the state pension and responded to that.

 

[denislawsbackheel]

The other idea is just more uninformed posturing.

 

[bluemonkey71]

I'd be amazed if anything she announces would come in within at least a couple of years and I suspect that may be the maximum you can pay in or the tax relief applicable.

If she changed say 25% tax free down to 20% would that be immediate or from April 2026?

I turn 55 next Feb and was thinking of pulling 25% out of a pot and lumping it on my mortgage. I'll still be working but paying more in to another pot to offset what I've just pulled out.

 

[Gareth Barry Conlon]

If she changed say 25% tax free down to 20% would that be immediate or from April 2026?

I turn 55 next Feb and was thinking of pulling 25% out of a pot and lumping it on my mortgage. I'll still be working but paying more in to another pot to offset what I've just pulled out.

It's impossible to say but governments in the past have faced massive criticism for making immediate changes to pensions and disrupting long made plans. So anything significant you would expect a long lead in. If its minor tweaks then they could be immediate.

Your plan makes sense however the 25% gets fixed at the time you drawdown the first bit. So if you are lumping loads in and getting a good return then waiting should increase the overall pot and therefore increase the 25% tax free amount. You should aim for a maximum pot then drawdown the lump.

PS I'd go very low risk assets as a dip in the market would also impact that 25% figure.

 

[bluemonkey71]

"25% gets fixed at the time you drawdown the first bit" of all pots or the pot I'm pulling out of?
To be clear I have 2 pots, one where I'm pulling from which has grown with no contributions for a few years and my current work one which is growing every month with contributions.

 

[hampshireblue]

"25% gets fixed at the time you drawdown the first bit" of all pots or the pot I'm pulling out of?
To be clear I have 2 pots, one where I'm pulling from which has grown with no contributions for a few years and my current work one which is growing every month with contributions.

However it's made up you're limited to £268000 of TFC. I genuinely don't see there being a big reduction, if any, of TFC in the short/medium term. Imagine you were about to retire with a TFC of £250000 intending to pay off your interest only £250K mortgage and suddenly the limit was £200k leaving you with a £50k shortfall. It's political suicide. Giving 10 years' notice, maybe.

 

[dickie davies]

"25% gets fixed at the time you drawdown the first bit" of all pots or the pot I'm pulling out of?
To be clear I have 2 pots, one where I'm pulling from which has grown with no contributions for a few years and my current work one which is growing every month with contributions.

I didn't know that!
I thought if say I had £300k in avsingle fund, I could draw out £50k a year with 12.5 being tax free, 12.5 tax free allowance and the 25 subject to tax and continue to leave the 250 funds where they are

You're saying that once any amount has been accessed, no matter how small the whole lot has to be moved

 

[Millwallawayveteran1988]

I didn't know that!
I thought if say I had £300k in avsingle fund, I could draw out £50k a year with 12.5 being tax free, 12.5 tax free allowance and the 25 subject to tax and continue to leave the 250 funds where they are

You're saying that once any amount has been accessed, no matter how small the whole lot has to be moved

You can.

You can partially crystallise your fund.

Assume no growth and no charges.

Year 1 you crystallise £50k you take £12.5k TFC and then rest as income.

Same again year 2 and so on until the fund has run out by year 6.

Lots of people use the strategy to fund early retirement.

 

[Tommy_Catons_Perm]

So would you ask the 90 year old woman to go back to work?

Nope. Not asking anything. Just stating mathematical facts.

 

[East Level 2]

Let's wait and see. Time will be the judge on that particular issue.

Nice cop-out answer.

 

[bluemonkey71]

ok last (stupid) question. These are just random numbers to make it easier to understand.

Assume pot 1 has 400K - no current contributions
Assume pot 2 has grown to 500K - after paying into for a number of years after taking 25% from pot 1

Assuming Rachel from accounts doesn't change anything.

You take 25% tax free from pot 1 (100k). Leaving 300k. That crystallizes leaving 300k. I assume you can just leave it there to grow and not take a drawdown/annuity?

You retire some years later, you have already taken 100k from pot1, so you can take 25% tax free from pot 2 at that point(125k out of the 500k which, combined with the 100k you already took doesn't breach 268k) assuming the thresholds dont change. Does that sound about right?

 

[Gareth Barry Conlon]

I didn't know that!
I thought if say I had £300k in avsingle fund, I could draw out £50k a year with 12.5 being tax free, 12.5 tax free allowance and the 25 subject to tax and continue to leave the 250 funds where they are

You're saying that once any amount has been accessed, no matter how small the whole lot has to be moved

You can draw as much as you like when you like. The tax bit is where it gets a little complicated, the tax free bit is crystallised across all your funds on the date you first make a drawdown.

 

[Tommy_Catons_Perm]

Are you saying I'm 90??!!

I agree with you being pedantic, I will rephrase, I was in full employment, without claiming any state benefits until I retired.

I did not say you were 90. Your rephrased statement is more accurate. Thanks.

 

[Millwallawayveteran1988]

ok last (stupid) question. These are just random numbers to make it easier to understand.

Assume pot 1 has 400K - no current contributions
Assume pot 2 has grown to 500K - after paying into for a number of years after taking 25% from pot 1

Assuming Rachel from accounts doesn't change anything.

You take 25% tax free from pot 1 (100k). Leaving 300k. That crystallizes leaving 300k. I assume you can just leave it there to grow and not take a drawdown/annuity?

You retire some years later, you have already taken 100k from pot1, so you can take 25% tax free from pot 2 at that point(125k out of the 500k which, combined with the 100k you already took doesn't breach 268k) assuming the thresholds dont change. Does that sound about right?

Yes

 

[BlueHammer85]

I’m 40 and have 87k in work place pension pot… is that ok ?

 

[Stephen Ireland's pants]

I’m 40 and have 87k in work place pension pot… is that ok ?

Its about 86.5 k more than me . So i would say its not bad . I am also 11 years older

 

[BlueHammer85]

Its about 86.5 k more than me . So i would say its not bad . I am also 11 years older

Can’t argue with that.

Guessing self employed and never enrolled in a pension ?

 

[RobMCFC]

You can draw as much as you like when you like. The tax bit is where it gets a little complicated, the tax free bit is crystallised across all your funds on the date you first make a drawdown.

Yes

Unless I am misunderstanding things, these two answers seems to be contradictory.

If you take 25% tax free from pot1 then surely you can take 25% tax-free from pot 2 at any point in the future? Which is what Millwallawayveteran1988 is saying.

GBC's comment about "across all your funds" seems to tie the two pots together. Have I misunderstood that comment?