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Missus fed up of work.

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  • TESCOBABE56
    TESCOBABE56 Posts: 447 Forumite
    jamesd wrote: »
    The transfer value looks reasonably good.

    She can make £720 a year tax free by paying 2880 net into a pension, having it grossed up to 3600 then withdrawing it. Can only do the withdrawing part from age 55. Can only pay in for this until age 75.
    Seriously ?
    We are both over 55, neither of us pay into pensions, either privately or by NI. Can we really make £720 a year for nothing ?
    We could both (I assume) use that to buy another year of NI contributions (my SRP is less than hers), who would perform this task ?
    10th January 2017
    Is it too late to make a new year resolution ?
    Rather than a flounce.
  • xylophone
    xylophone Posts: 45,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    http://www.thisismoney.co.uk/money/pensions/article-3535618/STEVE-WEBB-Buying-ups-paying-missing-NI-boost-state-pension.html

    http://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/513609/CA5603.pdf
    neither of us pay into pensions,

    Your employer/your wife's soon to be ex employer do not offer a scheme?

    https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

    https://www.taxation.co.uk/Articles/2015/05/05/333016/money-go-round
    ( from previous tax year).
  • TESCOBABE56
    TESCOBABE56 Posts: 447 Forumite
    xylophone wrote: »
    Your employer/your wife's soon to be ex employer do not offer a scheme?

    No. I dont work and my wifes employer doesn't offer a scheme.

    I note in the Steve Webb article -
    One thing well worth bearing in mind is that there is no rush to make these contributions. In general, you have up to six years to pay contributions for a particular financial year. Unless the rules change, you might well want to think about holding on to your cash (perhaps investing it and earning a bit of interest) and then buying all four ‘missing years’ at some point close to your actual state pension age.

    So I can top up five years for £733 pa(£3666), to gain £817 pa after basic tax.Break even after four and a half years. Total state pension £121+£15 a week.

    And the wife can top up seven years for £733 pa(£5132), to gain £1447 pa free of tax.Break even after three and a half years.Total state pension £125+£28 a week.

    Seems a no brainer.
    10th January 2017
    Is it too late to make a new year resolution ?
    Rather than a flounce.
  • Techno
    Techno Posts: 1,169 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    This is why this board is so amazing - we find out fantastic nuggets of info that help us save or make money.
    ;) If you think you are too small to make a difference, try getting in bed with a mosquito!
  • molerat
    molerat Posts: 34,586 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 3 January 2017 at 7:32PM
    Also will either of you be looking after grandchildren for at least (part of) one day a week whilst the parent is at work ? Another nice little NI credit earner ;)
  • TESCOBABE56
    TESCOBABE56 Posts: 447 Forumite
    molerat wrote: »
    Also will either of you be looking after grandchildren for at least (part of) one day a week whilst the parent is at work ? Another nice little NI credit earner ;)
    Not unless I can borrow a rug rat.
    10th January 2017
    Is it too late to make a new year resolution ?
    Rather than a flounce.
  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    TESCOBABE56 wrote: »
    Seriously ?
    We are both over 55, neither of us pay into pensions, either privately or by NI. Can we really make £720 a year for nothing ?
    Yes, seriously. Or less if there isn't enough unused personal allowance to keep it all tax free.
    TESCOBABE56 wrote: »
    We could both (I assume) use that to buy another year of NI contributions (my SRP is less than hers), who would perform this task ?
    Yes, details on how to do it given with state pension forecasts. Posting off a cheque is how I did it some years ago.
  • TESCOBABE56
    TESCOBABE56 Posts: 447 Forumite
    My thanks to Jamesd and others.

    My thinking now is
    Take £11000 lump and £1650pa

    Open the wife a personal pension (Hargreaves Lansdown ?)
    Pay in £2880 this year, £720 added by government.
    Then, in 17/18 the wife can draw, tax free, £3600(ish) from HL, and £1650 from her deferred pension.
    That gives her £5250 pa.

    The £11k will cover four years (ish), then we can continue this tax efficient procedure until she is 75. £15 a week, foc.

    We can sort out the SRP at any time in the next five years.

    Wish I had known eleven years ago.
    10th January 2017
    Is it too late to make a new year resolution ?
    Rather than a flounce.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    TESCOBABE56 wrote: »
    Open the wife a personal pension (Hargreaves Lansdown ?)
    Pay in £2880 this year, £720 added by government.
    Then, in 17/18 the wife can draw, tax free, £3600(ish) from HL,

    I'm a fan of HL but they are (or were) too expensive for this stratagem in its entirety: they have an extra charge if you close your account too soon after opening. Alternatively you have to leave £1000 (do check!) behind and then there's no extra charge. You could leave the same £1000 behind year after year so it's only in the first year that you have a reduced withdrawal.

    I think I remember that Virgin is a cheap place to pull this stunt without a need to leave anything behind.

    P.S. No need to wait until 17/18 to remove the £3600 - you can do it as soon as the provider has received the £720 from the taxman- a matter of weeks, usually.
    Free the dunston one next time too.
  • TESCOBABE56
    TESCOBABE56 Posts: 447 Forumite
    kidmugsy wrote: »
    I'm a fan of HL but they are (or were) too expensive for this stratagem in its entirety: they have an extra charge if you close your account too soon after opening. Alternatively you have to leave £1000 (do check!) behind and then there's no extra charge. You could leave the same £1000 behind year after year so it's only in the first year that you have a reduced withdrawal.

    I think I remember that Virgin is a cheap place to pull this stunt without a need to leave anything behind.

    P.S. No need to wait until 17/18 to remove the £3600 - you can do it as soon as the provider has received the £720 from the taxman- a matter of weeks, usually.
    Thanks.
    £1000 will be no problem as she is thinking of finishing in July, she could just start drawing from August @ £300 pcm.
    So HL get a free loan of £1000 for ever and another £1800(on average) from the active amount.
    Sounds a decent deal for both sides.
    10th January 2017
    Is it too late to make a new year resolution ?
    Rather than a flounce.
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