Pensions Planning: The NUMBER

kempiejon · 16 June at 5:31PM

My early mistrust of government meddling in pensions caused me to direct the majority of my ER planning to ISAs and unsheltered. Tax was more begin to dividend income and capital gains in those days. Which, luckily for now, means much of my investment income is not taxed - I have moved most to ISAs now though still try and use the cap gains and dividend allowances.

ISAs fill the gap before 55 and before SP age I can extract a fair amount from the SIPP without tax and reinvest in ISAs any surplus to generate more tax free income. If I need extra funds in that period of course I can opt to take more from the taxable accounts and pay income tax - or not I can draw extra from ISAs. From 67 I can no long opt out of tax 'cept by deferring SP, then I'll extract up to the basic rate, well that's th broad current plan. Fiscal drag is probably only bothering ~30% of my retirement income provision.

WillC999 · 17 June at 4:41PM

https://forums.moneysavingexpert.com/discussion/comment/82037248#Comment_82037248

How can you extract a 'fair amount' from your SIPP without tax? The personal allowance is 12.5k. You mention dripping SIPP into ISAs, but this is limited to 20k pa, and as of next year, 12k in cash and 8k in S&S?

WillC999 · 17 June at 4:42PM

https://forums.moneysavingexpert.com/discussion/comment/82037024#Comment_82037024

Yes, I do wonder if the RLS figures are deliberately over-cooked to encourage people to work longer! The top end is something like 60k (after tax) which sounds rather opulent to me, but each to their own.

kempiejon · 17 June at 6:14PM

@WillC999 £200k is a fair amount in my book. We must move in different circles. I expect to take UFPLS up to personal allowance plus 25% tax free bit about ~£17k for 12 years 55-67, with some luck perhaps some residual tax free lump sum. Come state pension I'd move money from SIPP to ISA using up basic rate band and as much of the £20k S&S as I can afford; of course I'll be living on my investments and might choose not to shelter into ISAs as I indulge others or myself.

MeteredOut · 18 June at 9:28AM

https://forums.moneysavingexpert.com/discussion/comment/82038475#Comment_82038475

Just interested, who are you suggesting might have over-cooked the figure to make people work longer, and why?

michaels · 18 June at 9:34PM

https://forums.moneysavingexpert.com/discussion/comment/82039216#Comment_82039216

More money under management = more money earned by the asset management industry….

mrklaw · 19 June at 7:41AM

watching Fidelity’s latest video which talks about these figures - they said that the Pension Living Standards people also produced numbers of how big a pot you’ll need. And they base that number on buying an annuity at retirement.

I swear half or more of the pension industry is still living in 2014