Pensions Planning: The NUMBER

SarahB16

michaels said:

pterri said:

Still planning to go in July 2025 (age 57)

I’ll have an of ISA £89,165 and SIPP £121,408 available. I intend to use some of that to bridge until I’m 60.

I will have built up around £40,000 DB on leaving (RPI linked, max 5%, not sure what index they will use post 2030).  I can access that without reduction at 60 or £33,927 immediately (at 57) or £39,244 reducing to £30,039 in July 35 (when I’m receive the full SP at 67)

Also an AVC £140,252. I need to decide what I do with that on commencement of the DB, take some or all as a lump sum and/or transfer to a SIPP. I think I’ll take the lump sum, put it in a GIA and feed into an isa? Dunno.

 

If I were advising someone else and assuming they had a similar lifestyle to me I’d say you have no worries sunshine,  go for it. I’m still a little apprehensive, but only a little, 

The numbers above may increase by £10k or so depending on how much I save into the SIPP/ISA. It’s surprisingly nerve wracking but I realise I’m in a fortunate position  

Why would you be able to take all the AVC as a lump sum? (without being taxed prohibitively)

@michaels I'm sure @pterri will be along to answer your query regarding his personal circumstances but for me, if my AVC is less than my DB pension x 6 2/3 I can take all of my AVC as a tax free lump sum.  Anything in excess of that amount I need to purchase as additional pension.  There is no tax to pay.  

pterri

SarahB16 said:

michaels said:

pterri said:

Still planning to go in July 2025 (age 57)

I’ll have an of ISA £89,165 and SIPP £121,408 available. I intend to use some of that to bridge until I’m 60.

I will have built up around £40,000 DB on leaving (RPI linked, max 5%, not sure what index they will use post 2030).  I can access that without reduction at 60 or £33,927 immediately (at 57) or £39,244 reducing to £30,039 in July 35 (when I’m receive the full SP at 67)

Also an AVC £140,252. I need to decide what I do with that on commencement of the DB, take some or all as a lump sum and/or transfer to a SIPP. I think I’ll take the lump sum, put it in a GIA and feed into an isa? Dunno.

 

If I were advising someone else and assuming they had a similar lifestyle to me I’d say you have no worries sunshine,  go for it. I’m still a little apprehensive, but only a little, 

The numbers above may increase by £10k or so depending on how much I save into the SIPP/ISA. It’s surprisingly nerve wracking but I realise I’m in a fortunate position  

Why would you be able to take all the AVC as a lump sum? (without being taxed prohibitively)

@michaels I'm sure @pterri will be along to answer your query regarding his personal circumstances but for me, if my AVC is less than my DB pension x 6 2/3 I can take all of my AVC as a tax free lump sum.  Anything in excess of that amount I need to purchase as additional pension.  There is no tax to pay.  

Yep, it’s a quirk of how AVCs are treated when linked to the DB scheme. Tax free

AlanP_2

Doesn't apply to all DB schemes but a very useful perk where it can be used e.g. the local gov scheme.

LL_USS

pterri said:

Still planning to go in July 2025 (age 57)

I’ll have an of ISA £89,165 and SIPP £121,408 available. I intend to use some of that to bridge until I’m 60.

I will have built up around £40,000 DB on leaving (RPI linked, max 5%, not sure what index they will use post 2030).  I can access that without reduction at 60 or £33,927 immediately (at 57) or £39,244 reducing to £30,039 in July 35 (when I’m receive the full SP at 67)

Also an AVC £140,252. I need to decide what I do with that on commencement of the DB, take some or all as a lump sum and/or transfer to a SIPP. I think I’ll take the lump sum, put it in a GIA and feed into an isa? Dunno.

 

If I were advising someone else and assuming they had a similar lifestyle to me I’d say you have no worries sunshine,  go for it. I’m still a little apprehensive, but only a little, 

The numbers above may increase by £10k or so depending on how much I save into the SIPP/ISA. It’s surprisingly nerve wracking but I realise I’m in a fortunate position  

Indeed this is a great position to be in. I guess we as human beings tend to still have that tendancy for social comparison :-). Then I realise that each invididual/ household is all different. Many of us would never be able to build up such DB and DC (plus other savings) given a small or average salary. Sorry to say I am a bit jealous, as my career never took off, just having a steady level to allow me to do other things that I needed to do. I am only working towards a much smaller DB but I will be happy with that - so that's all that matters. Good luck with your financial planning and have a decision that you are happy with regarding the age to retire :-).

michaels

SarahB16 said:

michaels said:

pterri said:

Still planning to go in July 2025 (age 57)

I’ll have an of ISA £89,165 and SIPP £121,408 available. I intend to use some of that to bridge until I’m 60.

I will have built up around £40,000 DB on leaving (RPI linked, max 5%, not sure what index they will use post 2030).  I can access that without reduction at 60 or £33,927 immediately (at 57) or £39,244 reducing to £30,039 in July 35 (when I’m receive the full SP at 67)

Also an AVC £140,252. I need to decide what I do with that on commencement of the DB, take some or all as a lump sum and/or transfer to a SIPP. I think I’ll take the lump sum, put it in a GIA and feed into an isa? Dunno.

 

If I were advising someone else and assuming they had a similar lifestyle to me I’d say you have no worries sunshine,  go for it. I’m still a little apprehensive, but only a little, 

The numbers above may increase by £10k or so depending on how much I save into the SIPP/ISA. It’s surprisingly nerve wracking but I realise I’m in a fortunate position  

Why would you be able to take all the AVC as a lump sum? (without being taxed prohibitively)

@michaels I'm sure @pterri will be along to answer your query regarding his personal circumstances but for me, if my AVC is less than my DB pension x 6 2/3 I can take all of my AVC as a tax free lump sum.  Anything in excess of that amount I need to purchase as additional pension.  There is no tax to pay.  

Interesting, I thought this was lgps only and lgps was fully rpi so not the ops scheme.  Didn't realise there were other linked db/dc schemes.

swindiff

USS is also a hybrid db/dc scheme allowing you to take much more than 25% of the dc pot tax free when linked to the DB pension.

pterri

LL_USS said:

pterri said:

Still planning to go in July 2025 (age 57)

I’ll have an of ISA £89,165 and SIPP £121,408 available. I intend to use some of that to bridge until I’m 60.

I will have built up around £40,000 DB on leaving (RPI linked, max 5%, not sure what index they will use post 2030).  I can access that without reduction at 60 or £33,927 immediately (at 57) or £39,244 reducing to £30,039 in July 35 (when I’m receive the full SP at 67)

Also an AVC £140,252. I need to decide what I do with that on commencement of the DB, take some or all as a lump sum and/or transfer to a SIPP. I think I’ll take the lump sum, put it in a GIA and feed into an isa? Dunno.

 

If I were advising someone else and assuming they had a similar lifestyle to me I’d say you have no worries sunshine,  go for it. I’m still a little apprehensive, but only a little, 

The numbers above may increase by £10k or so depending on how much I save into the SIPP/ISA. It’s surprisingly nerve wracking but I realise I’m in a fortunate position  

Indeed this is a great position to be in. I guess we as human beings tend to still have that tendancy for social comparison :-). Then I realise that each invididual/ household is all different. Many of us would never be able to build up such DB and DC (plus other savings) given a small or average salary. Sorry to say I am a bit jealous, as my career never took off, just having a steady level to allow me to do other things that I needed to do. I am only working towards a much smaller DB but I will be happy with that - so that's all that matters. Good luck with your financial planning and have a decision that you are happy with regarding the age to retire :-).

Honestly, there’s quite a bit of luck in there. Right place and right time for job and house buying. A few years later and the house purchase would have swallowed  up a chunk of it. Also, I’m just not a big spender.

pterri

michaels said:

SarahB16 said:

michaels said:

pterri said:

Still planning to go in July 2025 (age 57)

I’ll have an of ISA £89,165 and SIPP £121,408 available. I intend to use some of that to bridge until I’m 60.

I will have built up around £40,000 DB on leaving (RPI linked, max 5%, not sure what index they will use post 2030).  I can access that without reduction at 60 or £33,927 immediately (at 57) or £39,244 reducing to £30,039 in July 35 (when I’m receive the full SP at 67)

Also an AVC £140,252. I need to decide what I do with that on commencement of the DB, take some or all as a lump sum and/or transfer to a SIPP. I think I’ll take the lump sum, put it in a GIA and feed into an isa? Dunno.

 

If I were advising someone else and assuming they had a similar lifestyle to me I’d say you have no worries sunshine,  go for it. I’m still a little apprehensive, but only a little, 

The numbers above may increase by £10k or so depending on how much I save into the SIPP/ISA. It’s surprisingly nerve wracking but I realise I’m in a fortunate position  

Why would you be able to take all the AVC as a lump sum? (without being taxed prohibitively)

@michaels I'm sure @pterri will be along to answer your query regarding his personal circumstances but for me, if my AVC is less than my DB pension x 6 2/3 I can take all of my AVC as a tax free lump sum.  Anything in excess of that amount I need to purchase as additional pension.  There is no tax to pay.  

Interesting, I thought this was lgps only and lgps was fully rpi so not the ops scheme.  Didn't realise there were other linked db/dc schemes.

The AVC isn’t a DC scheme, or at least not described as such, but amount to to the same thing I guess. You have to decide whether to take an annuity, lump sum or transfer out on commencement. I wonder what schemes will do when RPI is no longer published? CPIH is the replacement but generally tracks CPI more closely, RPI tends to be 1% or so greater than CPI. My scheme is very well funded so they may decide to give something over CPIH? I’ll find out in 2030. For those who joined the scheme pre 1989, they get UPCAPPED increases! Im still counting myself as lucky though. 

Cobbler_tone

It is interesting to read this and numerous threads on people's lifestyles, levels of risk and contingences people build in. I think our plan is more bullish and really don't understand why people feel/want to build such wealth, unless of course it is supporting an extravagant lifestyle, which is fair enough.

We will retire at 58 and 55 respectively in 2 years time. We have a current income of £6k net per month and will retire on half of that using modest DB's and DC drawdowns. No mortgage and will use lump sums to up size, just because we want a big house.
The bridge to 67 (before staggered full SP's) limits any 'risk', plus just because you retire from a long term job, it doesn't mean retirement forever. I find that too 'final'! 
If I loved my job I would probably go to 60 but you don't know how long you have and don't anticipate that I will want to be travelling significantly well into my 60's with 3 back operations behind me. 

So my 'number' is 50% of the net money I earn today.

LL_USS

Sometime ago I asked myself "why would someone want to accumulate 1 mil in ISAs in their 70-80s, if they don't use that amount what it is for".

I suppose people skimp on their expenses, accumulate wealth to have more choices of when to retire, and for a more luxurious retirement years. Or to help future generations. Otherwise I would love to spend on myself now when I still have my health to enjoy travelling and learning new things. 

For my case it's a balance to strike. With careful planning, hard work and luck, I have accumulated more than I need (not factoring too much in for care home service or really unfortunate things that perhaps I can't think of now and would not like to think of). But I still save and am careful with money to save more to help the kids, whilst trying to do what I can for "life experiences" for all the family.