Saving.. Pension...portfolio.. bond?

fertyskids

Hi

me and hubby need to save approx £700/£800 pcm. Hubby is higher rate tax payre (just) earnt 50k last year. i do not work.

we have a bond of 10k rubbish rate,
10500k this years cash isa,
4k in a current account,
2k in another current account
cash isa 3600.

I plan to move the 4k and another 1k as below. the rest will stay as is at the moment so that we ahve some easy access cash if we need it.

spoke to a IFA who has advised us to

1. get a pension for me of £265 a month as im not working the government will top it up by 20% i have a very samll silly local authority pension that i no longer pay into so will need something else.

2. To put £5100 into a portfolio investment isa for me again.

3. For hubby to pay a bit more into his work pension as he only pays £85 pcm and work will also put in more.

4. To put £445 pcm into a portfolio ongoing....

he said this is best as hubby is 40% tax payer (earnt 50k last yr) im not working and these ideas will take advantage of not paying too much tax.

Would you do this or something else ?

wnated your ideas... as ive asked about things before on this site and had some really good advise......

jem16

fertyskids wrote: »

Hi

me and hubby need to save approx £700/£800 pcm.

Are you saving for something in particular? Over what timescale?

fertyskids

We are trying to save for the longterm... well 10 to 15 yrs at the least. not really sure for what.

We have treated ourselves and replaced the old car with one a bit newer, we have treated the family to a holiday first time in 6 yrsa dn wont go again for about that time as we see it as a treat.

just that at the moment hubby earns more than we need, maybe in 3-5yrs or longer he might not ( has had the threat of redundnacy for years but have recently said that he has 3-5yrs). thanks

dunstonh

Would you do this or something else ?

The IFA has the advantage of knowing your personal circumstances and financial needs as well as your investment knowledge, experience and risk profile. We don't.

joerugby

I'm surprised your IFA is suggesting that you start a pension yourself (with 20% tax relief) rather than your husband using the same money to increase his contributions further (with 40% tax relief) - presumably your IFA knows more about your circumstances than we do

dunstonh

I'm surprised your IFA is suggesting that you start a pension yourself (with 20% tax relief) rather than your husband using the same money to increase his contributions further (with 40% tax relief) - presumably your IFA knows more about your circumstances than we do

Not unusual and it is common sense. In retirement (post 65) each person can earn £10k tax free. If everything is in the husbands name then they only use one age allowance up. The other is wasted.

e.g. one person earning 20k pays £2k tax. A couple earning £10k each pay no tax. A saving of £2000 a year just by changing where the direct debit is paid.

Also, if you go through £22,900 of income after 65, you pay increased tax as the age allowance gets reduced. It can effectively create a band where you pay over 30% tax on income. There are also death benefits to consider as well. Retirement planning should always be viewed jointly.

fertyskids

dunstonh wrote: »

Not unusual and it is common sense. In retirement (post 65) each person can earn £10k tax free. If everything is in the husbands name then they only use one age allowance up. The other is wasted.

e.g. one person earning 20k pays £2k tax. A couple earning £10k each pay no tax. A saving of £2000 a year just by changing where the direct debit is paid.

Also, if you go through £22,900 of income after 65, you pay increased tax as the age allowance gets reduced. It can effectively create a band where you pay over 30% tax on income. There are also death benefits to consider as well. Retirement planning should always be viewed jointly.

Thankyou im sure this was was my IFA was talking about i just coulnt remember exactly. thankyou .

jem16

fertyskids wrote: »

We are trying to save for the longterm... well 10 to 15 yrs at the least. not really sure for what.

As it seems to be long term saving you are after, the IFA's suggestions seem spot on.

As Dunstionh says the IFA knows your circumstances - no-one here does.

joerugby

dunstonh wrote: »

Not unusual and it is common sense. In retirement (post 65) each person can earn £10k tax free. If everything is in the husbands name then they only use one age allowance up. The other is wasted.

e.g. one person earning 20k pays £2k tax. A couple earning £10k each pay no tax. A saving of £2000 a year just by changing where the direct debit is paid.

Also, if you go through £22,900 of income after 65, you pay increased tax as the age allowance gets reduced. It can effectively create a band where you pay over 30% tax on income. There are also death benefits to consider as well. Retirement planning should always be viewed jointly.

As you say it makes sense to share income after retirement to save tax but it is of course possible to do this by taking up to 25% tax free cash from the husband's pension and transfering this across, as well transferring any other assets held outside pensions and ISAs.

It's just that alarm bells start ringing for me when an IFA recommends a course of action which might be earning him a commission over an alternative course from which he may earn nothing.

Hopefully this is not the case here!

dunstonh

but it is of course possible to do this by taking up to 25% tax free cash from the husband's pension and transfering this across

Not if the other spouse isnt working (as is the case here) or has a too small an income to allow it. A non working spouse can pay £3600 a year into a pension and get tax relief. Any amount above that would not get tax relief. So, building it up annually to utilise annual allowances that give tax relief each year is the common sense approach. Waiting until retirement than moving funds across would not benefit from tax relief to the same level.

It's just that alarm bells start ringing for me when an IFA recommends a course of action which might be earning him a commission over an alternative course from which he may earn nothing.

Joint planning on retirement benefits is a sign of a good adviser. The lower quality ones tend to focus on one partner only. The limited facts and information posted so far show no signs of any wrong doing and actually show a more holistic approach has been taken, which is what you want.

joerugby

dunstonh wrote: »

Not if the other spouse isnt working (as is the case here) or has a too small an income to allow it. A non working spouse can pay £3600 a year into a pension and get tax relief. Any amount above that would not get tax relief. So, building it up annually to utilise annual allowances that give tax relief each year is the common sense approach. Waiting until retirement than moving funds across would not benefit from tax relief to the same level.



Joint planning on retirement benefits is a sign of a good adviser. The lower quality ones tend to focus on one partner only. The limited facts and information posted so far show no signs of any wrong doing and actually show a more holistic approach has been taken, which is what you want.

I'm afraid I don't understand this point. A wife's lack of income has no bearing on whether tax free cash can be taken from a husband's pension on retirement.