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  • FIRST POST
    • assesser
    • By assesser 15th Jul 17, 10:38 AM
    • 43Posts
    • 3Thanks
    assesser
    10year to go
    • #1
    • 15th Jul 17, 10:38 AM
    10year to go 15th Jul 17 at 10:38 AM
    Hi all,
    As the title suggests aged 57, so ten years left to retirement age, background
    Old company DB pension at last statement 13,000per year or 48,000 tax free to then 6,400 per year, at 65
    Company DC pension I pay 3%company pays 7% estimated at around 48,000 at 65.
    Can pay more in to company if I want , company will not go higher than 7%
    Both myself and the wife have had state pension forecasts both will receive around 155 per week
    Homeowners and at 65 will need around 50,000 to finish mortgage if we want
    Question is it worth seeing an IFA yet?
    Would you pay more into pension?
    Would you pay mortgage off or use income to pay monthly?
    Any other tips or recommendations
Page 1
    • TomSurrey
    • By TomSurrey 15th Jul 17, 11:52 AM
    • 20 Posts
    • 16 Thanks
    TomSurrey
    • #2
    • 15th Jul 17, 11:52 AM
    • #2
    • 15th Jul 17, 11:52 AM
    Its hard to comment on this without having a fuller scenario including what your spending is, and what your plans for retirement are, what your other assets are and what your current income of you and your wife are, whats your current mortgage, what tax band are you in and what equity do you have in your home, how much are you currently paying into DC scheme currently. Do you have any debt? Any IFA would ask for these things anyway.

    First observation if check the details of your DB plan, for example if this as a guaranteed annuity rate, indexed linked etc, it would be crazy to take a lump sum. I'd protect this DB income at all costs.

    Second key question, how much do you think you could save per month into either additional pension saving or paying down your mortgage? If you're not currently using your companies DC matching contributions you should be maxing these out, does your wife work and have access to these too?

    If you're confident with doing a bit of modelling in excel I think you should be confident enough to do this yourself. with advice on places like here, using tax calculators etc. If you do as much as you can and then can't work out the right thing to do, then take your maths, your scenario to an IFA in 6 months time to get the advice.

    Finally congratulations, with your DB scheme, house almost paid off and enough NI contributions to get the state pension (times 2) you will be able to retire with an above average income, the decisions you'll make in the next few years will dictate how comfortable that will be.
    • Kynthia
    • By Kynthia 15th Jul 17, 11:52 AM
    • 4,995 Posts
    • 6,972 Thanks
    Kynthia
    • #3
    • 15th Jul 17, 11:52 AM
    • #3
    • 15th Jul 17, 11:52 AM
    Just a few questions:

    Is £13000 per year plus your state pensions enough for you?
    What happens when the person with the DB pension passes away? How much will that pension reduce and will there be enough to live on?
    Are you hoping you retire before state pension age and if so how much will you need and where will you get it from?
    Do you have any savings?


    Overpaying your mortgage usually saves you a lot less than you make from putting money into a pension. I personally wouldn't see an ifa yet but would start putting an awful lot more money into pensions and thinking about what money will be needed and when so that can be worked towards.
    Don't listen to me, I'm no expert!
    • Dazed and confused
    • By Dazed and confused 15th Jul 17, 11:53 AM
    • 1,768 Posts
    • 769 Thanks
    Dazed and confused
    • #4
    • 15th Jul 17, 11:53 AM
    • #4
    • 15th Jul 17, 11:53 AM
    Do you really need to increase your pension contributions???

    I would be ecstatic with existing 13000 + 48000 + 8000.

    Although you would be paying a lot of tax on the 13000 I personally wouldn't take the lump sum because although 48k is a decent lump it's such a huge drop from 13k to 6.4k
    • assesser
    • By assesser 15th Jul 17, 12:56 PM
    • 43 Posts
    • 3 Thanks
    assesser
    • #5
    • 15th Jul 17, 12:56 PM
    • #5
    • 15th Jul 17, 12:56 PM
    Thanks for thoughts,
    The overpaying mortgage against paying extra into pension is possible
    DB grows at 4% per year
    Savings bit in shares but very little
    Debt very little all on 0% anyway
    I did like the idea of finishing mortgage in a lump sum.
    If I overplayed mortgageand increased pension, I may be able to pay off with 25%lump out of DC
    • chiefie
    • By chiefie 15th Jul 17, 2:12 PM
    • 308 Posts
    • 318 Thanks
    chiefie
    • #6
    • 15th Jul 17, 2:12 PM
    • #6
    • 15th Jul 17, 2:12 PM
    If you are a 40% tax payer then pay into the pension.
    Start to cut back on the non essentials that tend to fritter money away where you can and save that.
    • AlanP
    • By AlanP 15th Jul 17, 9:21 PM
    • 939 Posts
    • 648 Thanks
    AlanP
    • #7
    • 15th Jul 17, 9:21 PM
    • #7
    • 15th Jul 17, 9:21 PM
    Hi all,
    As the title suggests aged 57, so ten years left to retirement age, background
    Old company DB pension at last statement 13,000per year or 48,000 tax free to then 6,400 per year, at 65
    Company DC pension I pay 3%company pays 7% estimated at around 48,000 at 65.
    Can pay more in to company if I want , company will not go higher than 7%
    Both myself and the wife have had state pension forecasts both will receive around 155 per week
    Homeowners and at 65 will need around 50,000 to finish mortgage if we want
    Question is it worth seeing an IFA yet?
    Would you pay more into pension?
    Would you pay mortgage off or use income to pay monthly?
    Any other tips or recommendations
    Originally posted by assesser
    If you are 57 can you not take the SP at 66 and not 67, so maybe only 9 years to go until that income stream starts?

    You say that your wife will get the full £155 p/week SP which implies she has a full set of NI payments. Does your wife also have any company pensions that need to be factored in?

    TBH whether your various amounts are "enough" depends on how much you want / need when retired so I would start by working out what your minimum need is to cover basic living costs and see how that compares to what you will be getting.

    Then "add on" the nice to haves such as holidays, entertainment and the rest of the stuff that covers what you would like to do and compare the numbers again.

    That should give you a pretty good idea of whether you need more pension income or not and you can then work on a plan to generate it.

    £13K DB + 2 lots of £8k SP = £29/30K a year which is not to be sneezed at and is a great "guaranteed" foundation.
    • FatherAbraham
    • By FatherAbraham 16th Jul 17, 7:55 AM
    • 737 Posts
    • 561 Thanks
    FatherAbraham
    • #8
    • 16th Jul 17, 7:55 AM
    • #8
    • 16th Jul 17, 7:55 AM
    Hi all,
    As the title suggests aged 57, so ten years left to retirement age,
    ...
    Question is it worth seeing an IFA yet?
    Originally posted by assesser
    That made me smile.

    IFAs who advise on pensions generally complain that clients tend to show up in their fifties, when it's more-or-less impossible to change much about their pension provision.

    If one is only going to consult an IFA about pensions once, it's far more useful, and one gets more out of the fees, by doing it early.

    One can't change history (far too few of us were sufficiently engaged with our pension saving early enough in life), but if you are going to take advice, then the sooner the better, no?

    Warmest regards,
    FA
    • atush
    • By atush 16th Jul 17, 11:58 AM
    • 16,300 Posts
    • 9,968 Thanks
    atush
    • #9
    • 16th Jul 17, 11:58 AM
    • #9
    • 16th Jul 17, 11:58 AM
    I would pay a lot more into pension if you can afford it.

    Use the LS from that to pay off mtg. Dont take the bigger LS fromt he DB pension.
    • TomSurrey
    • By TomSurrey 16th Jul 17, 3:00 PM
    • 20 Posts
    • 16 Thanks
    TomSurrey
    without more detail being so close to retirement generally now would be the time to save as much as possible, then as has been said take 25% out as tax free.
  • jamesd
    From age 55 you can pay money into a personal pension and take out £7500 each rolling twelve months - not tax year - as a tax free lump sum. In effect this eliminates the income tax on a quarter of the gross amount you pay in, without much delay in getting it, a few weeks. You leave the three quarters in a drawdown account but not taking any income from it because that would limit your ongoing pension contributions to four thousand pounds a year.
    Last edited by jamesd; 17-07-2017 at 10:20 AM.
    • enthusiasticsaver
    • By enthusiasticsaver 17th Jul 17, 10:00 AM
    • 4,431 Posts
    • 8,239 Thanks
    enthusiasticsaver
    I do think thinking about this in your mid fifties is too late and you definitely should not waste money on IFA fees. My advice would be use whatever spare income you have between now and retirement to both address repaying your mortgage and increasing your pension contributions. 10% total is not sufficient, I personally would be happier with a total of saving 20% so 13% from you and 7% from employer.

    what about your wife's company pension?
    Countdown to early retirement on 21.12.17 2 months to go.
    • justme111
    • By justme111 17th Jul 17, 12:10 PM
    • 2,820 Posts
    • 2,710 Thanks
    justme111
    From age 55 you can pay money into a personal pension and take out £7500 each rolling twelve months - not tax year - as a tax free lump sum. In effect this eliminates the income tax on a quarter of the gross amount you pay in, without much delay in getting it, a few weeks. You leave the three quarters in a drawdown account but not taking any income from it because that would limit your ongoing pension contributions to four thousand pounds a year.
    Originally posted by jamesd
    So one would need to open different personal pension each year then ? Or contribute to previous year one with 75% left from previous years' contribution?
    • kidmugsy
    • By kidmugsy 17th Jul 17, 12:56 PM
    • 9,670 Posts
    • 6,426 Thanks
    kidmugsy
    So one would need to open different personal pension each year then ? Or contribute to previous year one with 75% left from previous years' contribution?
    Originally posted by justme111
    Your provider will keep track of how much of your (say) SIPP has already had its 25% TFLS taken, and which hasn't. The provider might call them different "arrangements" or different "accounts" or something equivalent. If in doubt ring them and ask for an explanation. Or maybe their website will explain: that's usually a good place to start.
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