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Pension need to knows Official MSE Guide Discussion

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  • plymouthboy
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    I retired early and lucky enough have a workplace pension ( I'm 59 )
    I do have some lump sum money which I haven't blown yet !!

    I just started to wonder whether there is any advantage in my starting a SIPP or similar to be cashed out when I'm 75?

    As I understand it you get 20% tax relief added to the annual sum you invest so it just seems like a way of growing your savings ??
    Under the rules just announced in the budget I can get all my cash when I want ( Lhamborgini style !)

    So should I put some of my spare cash in another pension scheme ??

    Appreciate any thoughts
  • atush
    atush Posts: 18,731 Forumite
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    You could do, but with no earned income you can only put in 2880 per year, grossed up to 3600.

    Also depends on the type of pension you are drawing (at least until the rules fully change). Some like flexible DD mean that you can't pay into a further pension.
  • PrincessLucy
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    I'm wondering if someone can give me some advice?

    I'm 28 and have been paying into a private pension with Scottish Widows for about 4 years, paying in 5% of my salary (based on the amount I was earning at the time I took it out - £20,000). So currently I pay in £85 a month which works out around £105 with the Gov 20%. Over the years my wage has increased and I now earn £30,000 and so am thinking I should increase my contribution. My first question is, if I pay in 5% off my current wage will this actually give me a decent pension when I retire? And if not, what %age should I pay in?

    My second question is, my employer will in the near future need to start contributing to my pension through the auto-enrolment scheme (the company has 150ish employees), so I'm not sure whether to increase my Scottish Widow payments now or to wait until I have a pension through my employer and then decide which one I want to pay into?

    Thanks!
  • snapzz
    snapzz Posts: 1 Newbie
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    I've just had a small pension mature of just over £25k and had a couple of contrasting pieces of advice. Ideally I'd like to take £5,000 in cash but unsure what to do with the rest. I dont want to pay any tax on it but also not sure about leaving it until I'm 75. I'd be grateful of any advice or options for the best return.

    I'm now aged 60 and currently still working as self employed.

    Thanks
  • dunstonh
    dunstonh Posts: 116,823 Forumite
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    snapzz wrote: »
    I've just had a small pension mature of just over £25k and had a couple of contrasting pieces of advice. Ideally I'd like to take £5,000 in cash but unsure what to do with the rest. I dont want to pay any tax on it but also not sure about leaving it until I'm 75. I'd be grateful of any advice or options for the best return.

    I'm now aged 60 and currently still working as self employed.

    Thanks

    you can do that. However, your existing provider may not allow it as they may not offer that option. It is called unsecured income or drawdown. it is a niche option that is classed as higher risk at this moment in time.

    Pensions do not mature until age 75. Just because a plan has as selected age of 60 does not mean it needs to be taken at 60. you can tell them to defer it or move it to something better. Some plans have valuable guarantees (mainly older ones from mid 90s or earlier - the older the plan the more likely). These guarantees, if they exist, would be lost on what you propose doing. So, you need to be careful.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • glenrothes
    glenrothes Posts: 14 Forumite
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    Hi all, thank you already to those posting information in here, reading through all the extra here already has boosted my minute knowledge level.

    I was hoping to get some opinions on the next step for myself.

    I'm 25 and spent the last two years on a working holiday visa in Canada. Having just returned to the UK I've felt the pressure of age in sorting through money considerations that while travelling I haven't watched, other than to keep saving. I have a small amount in a fixed term isa, a smaller amount in a cash isa, and money still in Canada that I'm crossing my fingers that the interest rate gets better soon before transferring back to the UK using tranzfers.com.

    I'm expecting to be working in the UK for another year, then probably going to take advantage of the easy Australian visa to work there for a while. All of this is in <20,000 a year easy to get jobs.

    So I have two questions, the second of which is the most important for here:
    1. Is it worth starting a pension now, or better to keep putting money in an ISA for flexibility? I have enough for flights to and back from somewhere, plus a couple of months rent, so am safe in that respect.
    2. When I have no 'career' so am likely to keep switching jobs for a while, what happens if I opt-in to each employers pension? Can you add the old to the new when you switch jobs? Is a private one that you consistently pay into better than a new one every couple of years in terms of overall return?

    Or, am I missing something important that I should be considering?! Thanks :)
  • When do the new rules regarding choice to take cash rather than annuity actually take effect?


    Is there any chance the new rules announced this year can be reversed by subsequent legislation?
  • dunstonh
    dunstonh Posts: 116,823 Forumite
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    When do the new rules regarding choice to take cash rather than annuity actually take effect?

    2006 was the year you didnt have to buy an annuity. It was loosened further in 2011 and in April 2015, it will see further options.
    Is there any chance the new rules announced this year can be reversed by subsequent legislation?

    Yes. Like most legislation, it can be changed. You need to consider the views of the opposition and decide whether you want to vote for them or not knowing that it may result in a backtracking. The Conservative announcement on tax on pension funds on death brings in a difference between the two parties. Plus, it is partly tied to the Conservatives being in power in the next Govt.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    dunstonh wrote: »
    it is partly tied to the Conservatives being in power in the next Govt.

    And in turn it may depend on whether they form the government or join a coalition.

    Anyway the general principle is that a parliament cannot bind its successors. But remember that there's a handy wee gap between the start of the new tax year (April 6th) and the election (May).
    Free the dunston one next time too.
  • tinalives
    tinalives Posts: 903 Forumite
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    Hi All,

    I'm hoping someone can give me a little advice. I left my last job in July and have just received a letter to advise me that if I want to transfer my DC Workplace Pension Scheme to another provider, I need to notify them of my new provider by 18th October, otherwise my only option is to have my contributions refunded.

    I didn't work there for too long, so the transfer sum is £2369.86, but if I get my contributions refunded I would only get £898.96.

    My issue is that I only have the option to join my new workplace scheme when I've been there for 6 months, so I can't join until mid January 2015, which is too late for the transfer deadline.

    I'm assuming I need to take out a new pension to transfer the fund to in the meantime, but I really don't know where to start, especially considering I have so little time to get it sorted out.

    Can anyone offer any advice?

    Thankyou.

    T
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