Final salary,sipp

geelamch

Hi people,
Just looking for an answer to an idea that has been on my mind. I am in a final salary scheme" railway" . member since 1980 due to a few extra years for transfer of previous pension.
Age 47 salary 41k basic ,usually around 48-50k with overtime. I pay Avc's of £35 a week with £10 match from employer. £90 per week in assurance fund which matures in 8 years (not best in hindsight but done now) and save £600 cash in account for easy access ( holidays etc) no debt or mortgage. pension forecast looks quite good at present.£120000 lump sum and 18000 pension approx.not looking at state pension as I would like to leave at around 60.
Looking at my pay slip I think I should try and get rid of more of my taxable pay as we can manage quite well as wife works also (£16000).
Estimate I could utilise another £400 monthly to something long term .is there any point in taking out a sipp ? Would it give me tax relief.the reason I am asking is most of the 40% taxed salary is overtime,which I am happy to do the overtime.i just feel that I am giving the taxman this money too easy. I would be grateful for any input.

In summary I would like to add that I prefer long term savings as retirement plan and would like some kind of cash lump sum on retirement as the plan is to lie in the sun with a "spiced rum" and leave unmovable assets to kids .kind of hard to describe but I want the bag of cash and a bottle beer,knowing the kids are sorted.

Thanks for reading

xylophone

Had you and your wife considered seeing an IFA? You might well benefit from taking individual personal advice on your ( and her) pension situation but also perhaps, on IHT planning?
http://www.unbiased.co.uk/find-an-adviser?gclid=CO_D9qaavrYCFcjKtAodkVMAnw

geelamch

Hi xylophone,
Spoke to an fa at my wife's works expense around 18 months ago , he really summarised by saying he couldn't recommend pension changes on my side,however he did encourage more investment in wife's which we have done.
He explained that my own situation would soon be at the tax threshold.
I actually think he was more of a salesman than advisor(not to belittle fas as I am sure a lot are very good) he did recommend another visit at his workplace,however I felt slightly on edge due to his demeanour ( first impressions do count ) and hesitant nature.will probaly take the advice and see an ifa. Would just like some feedback before I take this step as I don't like to appear "stupid " and like like to be equipped with any input necessary.

xylophone

Have you checked with your own pension site for information?
https://www.railwayspensions.co.uk/Resources/Client/PML.RailwayPensions/Templates/PortalHome.aspx?DocID=2726&

http://www.hmrc.gov.uk/budget-updates/march2012/pensions-tax-relief.pdf

http://howto.moneyam.com/section/How-to-invest-in-sipps/

`'Holding a SIPP does not rule out investing in other forms of pension plan at the same time – you can take out a SIPP and run it alongside occupational and personal schemes, subject to the rules on maximum contributions as outlined earlier in this guide.`- might be worth a look

http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

http://www.thisismoney.co.uk/money/news/article-1594984/Tenants-in-common.html

Maybe worth a read before you see your professional adviser?

geelamch

Thanks for the info ,just one other query?does the sipp attract tax relief ,(just looking to save dough) .

geelamch

Just checked ,looks as though it is all covered under the lifetime/annual allowance.is this efficient

jamesd

Which tax threshold did he mention, the pension lifetime allowance or something else? I don't think it can be the pension lifetime allowance given the numbers you've written about.

For pension it's better to initially use the pension contributions for you into a personal pension, either a normal one or the SIPP type. Then when you're 55 you can take a tax free lump sum and use that to fund pension contributions for your wife. Meanwhile you'll have received higher rate tax relief on the money. You can also use income drawdown to take income from this pension pot and reinvest that income into a second pension pot for you, getting tax relief twice on the same money.

A major reason why pension contributions for a wife is good is the income tax personal allowance in retirement. Having a pension that will provide up to that much income, including the state pensions, means tax relief on the way in and no tax on the way out. But what is her current pension income situation? Any work schemes in her past or present that would provide her with a pension income?

xylophone

http://www.hmrc.gov.uk/incometax/relief-pension.htm
http://www.hl.co.uk/pensions/sipp/tax-benefits-of-a-sipp - some more reading.

geelamch

That's the kind of stuff I was hoping for Jamesd ,so I could open a sipp,take out at a later date and recycle the lump sum -pension. My wife is 8years younger than me ,so that is my big problem.therefore the recycling of monies sounds as if it could be a great road to go down. Do you see any drawbacks?

xylophone

A major reason why pension contributions for a wife is good is the income tax personal allowance in retirement. Having a pension that will provide up to that much income, including the state pensions, means tax relief on the way in and no tax on the way out. But what is her current pension income situation? Any work schemes in her past or present that would provide her with a pension income

Op has already said (post 3)

Spoke to an fa at my wife's works expense around 18 months ago , he really summarised by saying he couldn't recommend pension changes on my side,however he did encourage more investment in wife's which we have done.

I don't quite understand the reference to tax allowance in retirement with reference to a wife (unless the wife will be a non taxpayer in retirement which would seem to be unlikely where a woman will be entitled to a full state pension and an occupational pension).

xylophone

That's the kind of stuff I was hoping for Jamesd ,so I could open a sipp,take out at a later date and recycle the lump sum -pension. My wife is 8years younger than me ,so that is my big problem.therefore the recycling of monies sounds as if it could be a great road to go down. Do you see any drawbacks?

http://www.thisismoney.co.uk/money/pensions/article-2187521/Pension-trick-second-tax-free-lump-sum.html might be worth a look but note the final sentence and see
https://docs.google.com/viewer?a=v&q=cache:OCsCiY569pAJ:www.hl.co.uk/__data/assets/pdf_file/0005/45428/Recycling_Factsheet.pdf+pension+lump+sum+recycling&hl=en&gl=uk&pid=bl&srcid=ADGEESjZCUBzLGVSddxd_LYgYPeq15iGi9H9a4PgAj3_gBT8v5UNyjjasJ8ud6jSNE8_WBIhubOA_qX0G7EVTMKLCZTcGI2XyzSbiOAHEnuUmX4RImbYAEKZ6NMoToMR1U8jKB0t-CkB&sig=AHIEtbTT82XlFdcQsYfA63GbQZTifWuZUQ

concerning recycling lump sums into your pension.