Advice for financial future

Deemy

But the state pension with the top up covers the available personal allowance , hence likely any private pension will be taxable.

Infact the private pension will be deducted from the top up unless its a significant pension fund, providing far beyond the £50 or so top up a week... so usually much of the money is wasted

Wheras with ISA's it is in your power when you near retirement to take advantage of the pensions situation at that time.

dunstonh

Basic state pension is £4266. We dont know the NI situation or previous employment sitauation to assume whether there is any entitlement to a second state pension.

A married couple will often have the married persons pension meaning the wife doesnt get any pension in her name at all, giving her the full allowance.

Deemy

dunstonh wrote:

Basic state pension is £4266. We dont know the NI situation or previous employment sitauation to assume whether there is any entitlement to a second state pension.

A married couple will often have the married persons pension meaning the wife doesnt get any pension in her name at all, giving her the full allowance.

Thanks for the worse case scenerio , but there are flaws in the above -

DH your ignoring the pension credit which guarantees a minimum income for a couple over 60 at 167.05 per week or £8,686 per year !

Its that pension credit that gets eaten into by a private pension - so hence a couple with NO personal pension compared to a couple with say a pension pot of £80k would recieve roughly the same income !

So basically they have wasted their money by putting it into a pension.

cheerfulcat

dunstonh wrote:

It is currently.

Ah, an excellent point. ISAs are not guaranteed beyond 2010 and nor is their tax status.

dunstonh

Pension credit is reduced/removed based on the value of your investments. So one way or another you lose it.

A couple with a total of £40k investments and savings would count as £80 a week as far as the pension credit is concerned. So, a basic state pension each with no serps/S2P/Graduated would be £82.05 twice plus £80 investment deduction making a weekly income of £244.10. Well above the £197.59 pension credit maximum. Indeed, that couple would need to have under £16,745 in savings to get any pension credit.

So, basically your arguement has flaws in it.

Deemy

dunstonh wrote:

Pension credit is reduced/removed based on the value of your investments. So one way or another you lose it.

A couple with a total of £40k investments and savings would count as £80 a week as far as the pension credit is concerned. So, a basic state pension each with no serps/S2P/Graduated would be £82.05 twice plus £80 investment deduction making a weekly income of £244.10. Well above the £197.59 pension credit maximum. Indeed, that couple would need to have under £16,745 in savings to get any pension credit.

So, basically your arguement has flaws in it.

LOL... but you miss the obvious dear DH.

In that one can PLAN for their retirement..... so as to take advantage of their position AT retirement to maximise allowances

Who says you can't use your ISA's to buy a holiday home full of the latest gadgets, and a new merc to drive around in, or put your money into assets that don't count as liquid assets ... Oooh thats a nice painting hanging on the wall Or pay off ALL of your remaining debts so you live better in old age or one of a number of other gazzilion possibilities to ensure you maximise your allowances, unfortuanely with an pension - you have to draw the income to make use of it

I mean I am only 37, and I have my plans laid out well in advance of what I will do given the expected scenerio, offcourse the route to retirement will depend on how things are the closer one gets to retirement but it does not take a genius to figure out the options, barely a couple of hours of work a year ! And that is the benefit OF having iSA's THE FLEXIBILITY !!!!

As for ending of tax free status.... what happened to PEPs, and TESSA's --- did they lose their tax free status ?

dunstonh

LOL... but you miss the obvious dear DH.

In that one can PLAN for their retirement..... so as to take advantage of their position AT retirement to maximise allowances

Isnt that what I have been saying? Plan to utilise your tax free allowances with the pension and then use the ISAs for the amounts above that.

Who says you can't use your ISA's to buy a holiday home full of the latest gadgets, and a new merc to drive around in, or put your money into assets that don't count as liquid assets ... Oooh thats a nice painting hanging on the wall Or pay off ALL of your remaining debts so you live better in old age or one of a number of other gazzilion possibilities to ensure you maximise your allowances, unfortuanely with an pension - you have to draw the income to make use of it

Actually, the pensions credit department says so. Second properties are included the same as investments.

And that is the benefit OF having iSA's THE FLEXIBILITY !!!!

Yes, there is lots of flexibility with ISAs. That can work for and against you.

As for ending of tax free status.... what happened to PEPs, and TESSA's --- did they lose their tax free status ?

PEPs are not as tax free as they once were. With an the tax burden likely to increase over time, who knows what the future holds? I wouldnt plan for it being removed on existing products but if you have a crystal ball available....

Deemy

There are a near infinite number of mechanisms to ensure an £80k pot would be invisible for allowance purposes, even the income generated could be say swalloed up given the right mechnism say expenses on a hobbie treated as self employment

EdInvestor

dunstonh wrote:

Basic state pension is £4266. We dont know the NI situation or previous employment sitauation to assume whether there is any entitlement to a second state pension.

Someone with a full NI record retired now will find that his S2P will nearly double his state pension.

Check your entitlement to S2P by getting a state pension forecast, click here

dunstonh

Someone with a full NI record retired now will find that his S2P will nearly double his state pension.

Not if he/she is self employed or in a final salary occ scheme.