Pru GAR pension to annuity

atush

I am not a qualified actuary, but I would take the full pension with no LS. but, if you had no other cash savings, then it would be different.

With inflation, you would need equity investments to combat this. And this would mean investment risk you would not have with the GAR. But obv there is the inheritance issue.

What provision does your wife have already with your other savings, investments and pensions?

kidmugsy

You could always cover the inflation risk by putting as much as possible of your other savings into inflation-linked stuff e.g. I-L ISAs (keep an eye open for offers e.g. from Birmingham Midshires) and ILSCs from ns&i (should they issue them again).

Another trick is to say to yourself that an I-L annuity would return (say) 3.5% so that's the part of your GAR annuity you'll spend: the rest you'll put into investments e.g. pension contributions for your wife. Then recalculate each year to allow for the previous year's inflation. You can also cover the risk of early death leaving your widow short of funds by taking out life insurance. How much cover would the extra annuity buy you?

srcandas

Many many tx folks for the replies. I'll digest in the clear light of morning.

I can luckily recycle as my wife works for my company and is not legally my wife (that one probably irrelevant but adds fog) and does not pay all her salary into her SIPP

I'm not yet in drawdown angel but for both my partner and I that is the plan.

I'm only crystalising the pension because being a Pru with profits it is high risk with in effect zero growth.

:beer:

kidmugsy

If you die with a crystallised pension in drawdown your wife can continue to draw it down or buy an annuity with it. But I presume she must actually be your wife.

srcandas

kidmugsy wrote: »

If you die with a crystallised pension in drawdown your wife can continue to draw it down or buy an annuity with it. But I presume she must actually be your wife.

That can easily be arranged at a beneficial time. And could she not after 10 years of co-habiting make a claim???

My partner/wife being Spanish had upto 2 years ago no PP and her state pension from Spain and the UK is very difficult to assess. So our main priority now is to increase her SIPP to ensure she gets to use her full personal allowance when retired. In any case from all the calculations I have seen it is better to have two independent pensions than me having annuities that continue after my death. Especially if I use a little life insurance to cover the early years.

It is my partner's SIPP that lets me - in effect - recycle the 25% lump quite legally.

But I'm up early and back to the spreadsheets

RetirementAngel

Difficult it might be but I would make sure you do assess her State pension entitlement.
I can now see where you are coming from. If you think she will get a tax free income from the recycled lump sum because she has no other pension then it may make sense to do it.

You don't want to find out that the pension is taxed because she does in fact get a decent State pension.

Also, the Revenue's ability to tax the lump sum at up to 70% if they consider it recycling isn't changed by the fact that it is another person who gets the lump sum into their pension rather than you.

In short it is a risky plan you are hatching and you may be trying to be too cute.

Good luck! I'd say let us know what you decide to do. But if you do opt to re-cycle, it's not something you should put on a public forum - that would be a free gift to the Revenue when they consider was it all pre-planned or not!!

srcandas

RetirementAngel wrote: »

Good luck! I'd say let us know what you decide to do. But if you do opt to re-cycle, it's not something you should put on a public forum - that would be a free gift to the Revenue when they consider was it all pre-planned or not!!

I don't need luck now I have a guardian angel :j

Tx, I have now read the details. So I think as I have paid about £2000 or more into my pension and from this point on will reduce that to zero so I have a little room. Any future payments by me offer no tax benefits.

There also appears to be a £15000 limit so I'll take £14999 (may help).

And then I'll think really hard :rotfl:.

It's a pain because even without the lump I would still pay heavily into that SIPP but now may have to hold back.

As for on a public forum it is not my intention to break the rules. Tax avoidance is ok by me, tax evasion a no no. Don't want to end up like Al Capone :cool:

I'm afraid as much as it would be nice to assess my partners state pension it is impossible. She at the moment has 12 years to go and that may move out, may be paid in pesetas, and in the past has been based on the last 15 years of working life in spain (a rule that is changing) during which she has been in the UK. So here 28 years working in Spain may or may not amount to much. Probably 8 years here will be worth more and we could look at extra contributions I think.

:beer:

atush

No, even as a partner of 10 years she can't make any claims- on your state pension or any such benefits (incl inheritance, tax fgree swapping of assets etc). I would say it is beneficial to get married ASAP.

If you died tomorrow, unless you have a will she could get nothing (and even if you did as she wasn't married there could be inheritance tax etc). At least call your pension provider to put her as your legal beneficiary but she will not even then inherit your sipp w/o paying tax unless and until you marry.

If you dont' want the whole religious rigamarole thing, just go down to the register's office.

kidmugsy

Note that the anti-recycling rules are intended to inhibit the recycling of Lump Sums - you can cheerfully recycle as much of the annuity as you like. That may be another reason to draw the maximum GAR annuity.

srcandas

atush wrote: »

No, even as a partner of 10 years she can't make any claims- on your state pension or any such benefits (incl inheritance, tax fgree swapping of assets etc). I would say it is beneficial to get married ASAP.

If you died tomorrow, unless you have a will she could get nothing (and even if you did as she wasn't married there could be inheritance tax etc). At least call your pension provider to put her as your legal beneficiary but she will not even then inherit your sipp w/o paying tax unless and until you marry.

If you dont' want the whole religious rigamarole thing, just go down to the register's office.

Atush has my partner be talking to you??? I won't be
trapped that easily

Seriously great to check but with the spanish flat in her name and her own accounts that leaves my worldly fortune just under the inheritance tax level. And I'm uptodate with HL regarding next of kin.

My company goes to my business partner and its value is all down to expertise and thus has almost zero book value.

However not sure what you mean by claim on state pension. If as we hope she gets close to a full pension between Spain and the UK (a big hope but we have a few years to play with) are you saying she would get extra benefit from mine?

:beer: