Final salary pension decision

mookev

hi
really appreciate all the feedback and advice.
Here is more info:-
I cannot defer the pension

I will not be in the higher tax band if i keep working.


after 5 years assuming 3% cpi 2k gap between lower and higher pension has grown to £2300 and £2700 after 10 yrs

I am married and wife will get 50% when i die

Advisor bond idea is take max 5% of capital if stop full time which is max can take. Growth of bond should maintain capital. this is however tax "deferred" meaning when original investment used ie 20yrs at 5% all tax becomes payable. i guess you take less later so it lasts till you die and i dont fancy big tax bill when 80! lots think about eh?

mookev

I cant defer my pension

i am married and my wife will get half pension when i die

i will not be in higher tax rate if i keep working ft

difference of 2k is 2.3k at 5yrs and 2.7k at 10yrs assuming cpi 3%

thanks

xylophone

Will you receive the lump sum in this tax year? Have you ISAs for this tax year?

If not, if you took the smaller lump sum it would be absorbed by two S&S ISAS for you and your wife.

Income would be tax free.

jem16

mookev wrote: »

Advisor bond idea is take max 5% of capital if stop full time which is max can take. Growth of bond should maintain capital. this is however tax "deferred" meaning when original investment used ie 20yrs at 5% all tax becomes payable. i guess you take less later so it lasts till you die and i dont fancy big tax bill when 80! lots think about eh?

You would only have a big tax bill if the profit from the bond with appropriate top slicing relief takes you into higher rate tax. Otherwise there is no tax liability.

However at the moment I don't see any particular advantage to using an Investment Bond.

IronWolf

Take the bigger lump sum, enjoy it or give it to family. You dont wanna pop off in 5 years and have the pension fund swallow it up!

mookev

Hi all thanks for your replies.

Just done some more investigating following all your help:-

1. £30000 would by a pension of under £1500 year in private sector

2. Fee from FA for set up is 2000 for 60,000 and 1500 for 30,000

3. Gain of higher pension is as follows if i take higher income:=
25,000 in 10 years
40,000 in 15 years

4. I have an exixting distribution bond running 20 years, my gut feeling at this point is to take the larger pension, and invest the smaller lump sum of 30k in the existing bond and convert to income when i want to go part time. This way no charges ffa of 2000 and cant see much risk?