Pensions Planning: The NUMBER

kimwp

https://forums.moneysavingexpert.com/discussion/comment/82145976#Comment_82145976

Presumably also you have discussed it, but in case not, your current plans involve your wife retiring at 63 (Presumably so you retire together), which means she is losing more of her health before retiring. If she isn't already, then considering her retiring earlier, or going part time would seem reasonable.

If you will have 5k net in pension income, mostly from your pension, presumably you will be paying 40% tax on that? So not much point saving 40% tax to pay 40% tax, when your wife could be saving 20% tax by paying into a pension and taking less than the first tax threshold so paying 0 tax on withdrawal?

hugheskevi

If you will have 5k net in pension income, mostly from your pension, presumably you will be paying 40% tax on that? So not much point saving 40% tax to pay 40% tax, when your wife could be saving 20% tax by paying into a pension and taking less than the first tax threshold so paying 0 tax on withdrawal?

The contributions are benefiting from salary sacrifice, so getting at least 42% relief. The pot is not particularly close to the Lump Sum Allowance (but something to keep an eye on in future), so even if all the withdrawal is subject to higher rate tax, that is a tax rate of 30% factoring in pension commencement lump sum.

That gives an uplift of (£70 / £58) = 20.7%, and more if some of the employer NI saving is passed on, so well worth doing in addition to partner pension.

MarzipanCrumble

OK - been there in that I deferred SP at !0% pa increase and worked for about 5 years beyond SP age (female, old SP).

Just keep an eye on IHT liability.