retirement options?

waltzer

OH and I are planning to pack it all in in 5 years. We're aiming to travel a bit and do part time voluntary work (as well as enjoy ourselves). I was hoping someone might be able to look at our situation and feedback re our situation/options.
OH has final salary pension which will pay out 19K pa or 12.5 plus 55K falling to 8K at 65. I have two pensions: one with Pru (SP2 opt out) which currently has transfer value of 18K and my SLife current pension. I pay 8% of salary into this and employer pays 6%. I would expect to get around 2.5K pa from this. (I spent many years out of employment to look after our disabled son who is now self sufficient). We will also have 35K in savings (ISA) and be mortgage free. We will probably downsize house which might free up another 20K. We are both eligible for State Pension at 65.
So, we feel we could initially live OK on OH's 12.5K + 2.5K + interest from 90K savings and then roughly receive the same at 65 when SP kicks in.
Questions: Should I combine my two pension pots? Now? Later? Never?
That is, are there usually any benefits from having a single, larger pot versus two small ones?
Should OH take 55K or go for bigger pension?
If we take 55K what are our options for investing 90K to best advantage?
Given the small pension from SL at current rates of input should I up my payments further or do something else with any current extra cash?
Should I move my risk profile to the lowest on the SL pension now or wait a couple of years (I'm currently on the middle rank of three)?
Any other factors I've not taken into account?
Apologies for this avalanche but it would be good to get some feedback.
We will undoubtedly speak to an IFA in the future...just feel it's a bit premature at present and we'd like to get our thinking caps on now.
Many thanks

dunstonh

Should I combine my two pension pots? Now? Later? Never?

Later. It can be done at the same time as you do the open market option.

hat is, are there usually any benefits from having a single, larger pot versus two small ones?

Yes there is. However, as said, if you do OMO then its not an issue as you combine before you purchase the annuity.

Should OH take 55K or go for bigger pension?

Depends on your circumstances and requirements. There is no one size fits all answer to that one.

f we take 55K what are our options for investing 90K to best advantage?

Depends on your tax position, requirements and risk profile. Again, the answer will vary.

Given the small pension from SL at current rates of input should I up my payments further or do something else with any current extra cash

Obviously the more you put aside the more you will have later on. However, whether the pension is best or an ISA will depend on your circumstances.

Should I move my risk profile to the lowest on the SL pension now or wait a couple of years (I'm currently on the middle rank of three)?

Normally you start to reduce at year 5 but you dont do it all in one go. Some start at year 10. It all comes down to your risk profile.

waltzer

dunstonh...re the reply to the 55K question re tax position thanks and do you mean this:?
OH will be basic tax payer (12.5K income) myself also. I presume we should invesy all or most of 90K in my name as I will have the smaller income?
Also we would look for a middle ground position (surprise surprise) re risk.
The only option my tiny brain knows of is to try to put as much of it into ISA (although that would take some time) and in the meantime put the balance of 90K into highest rate savings account in my name. We'd be looking for a monthly income needles to say. Any other comments?

EdInvestor

What are your forecast respective state pensions?

What is the 'commutation rate' for the final salary pension ( the deal you state doesn't look generous). Is the pension index linked, what spouse pension does it have?

Are you working now?Are you still contracted out of the state 2nd pension? Possibly you should contract back in for future contributions as your return from the S2P may well be higher than from the Pru pension.

What tax free cash do you expect to get from your combined private pensions?

Are you in a position to make extra savings outside pensions over the next 5 years?

waltzer

Oh and I will both have 30 yrs contributions so will receive full SP?
(I've just requested a forecast in light of your question)
Could the final salary look poor because they will be retiring 8 years early? (I'm currently 53 OH is 52)
Both still working. Would 5 yrs contributions to SP2 really add up to much?
I have to balance the notion that approx 1600 pa is being paid into Pru which would give me a pot of money (currently 18K + 5x1600 = approx 26000) that I could use along with small early pension pot from SL between 58 and 65 when SP kicks in.
Could I find out anywhere what 5yrs SP2 payments would bring?
Also because we could have between 90 and 110 K cash (55K from OH pension; 35 from ISAs + 20K from downsizing home?) I thought it might be best to just forego the tax free cash available to me personally in return for a larger pension, bearing in mind we would need this to supplement the income from my OH's pension. Re commutation, I'll speak to them later re this (working down south this week).
Yes we are currently adding to our ISAs and after this year we will be able to save an extra 2 to 300 per month for the following four years.
BTW the 2.5K quote I mentioned for SL pension was theirs tho I now realise thanks to dunstonh that I could probably get more on the open market. SL offer this 2.5K or 1.5K pa with 8K cash. So if 8K invested I don't think it would stack up to 2.5K total tho'
Any idea what our options are for the 90-110K cash re investing for monthly return?
Thanks again to all.