What does the Chancellors pension revolution mean for us?

OldBeanz

kidmugsy wrote: »

Crow the stones! How about anti-recycling rules: will they go into the bin too?

Will have to wait and see. If that was the case I would retire on Monday:) having just put in a lump sum (to help reach £20k flexible drawdown) so must wait a couple of years.

atush

Flugelhorn wrote: »

OH is 57, not working and will get NHS pension at 60 or thereabouts
Am I reading this right? If we put 2880 / year into a DC pension then it will be credited as 3600. At 60 or whatever take 25% tax free and the rest at marginal rate (ie 0%). Suppose could wait a couple of months until next tax year to take NHS pension.

Must be a catch.

That's the way I read it.

In fact, some have been doing something similar called an immediate vesting PP. Open a pension with 2880, then grosses up to 3600, then take 25% TF and an annuity for the rest. Rinse and repeat yearly.

They eventually had lots of small annuity payments, but if you staggered taking them out you could get one a month. then DD became a possibility then you just combined the 75% left over pots.

lvader

OldBeanz wrote: »

Don't believe so. The concept of flexible drawdown will disappear IMHO.

I expect flexible drawdown to stay, it's just the proof of minimum income that goes.

Freecall

lvader wrote: »

I expect flexible drawdown to stay, it's just the proof of minimum income that goes.

I very much doubt this. Although it sounds simple the Chancellor made it clear that this was intended to give people as much flexibility as possible.

Despite its name, flexible drawdawn is very inflexible in the context of small pension pots in that when you start it you can no longer make pension contributions.

You would have the potential of lots of people taking some of their pension or maybe just their PCLS and then being excluded from the pension system.

I imagine that as OldBeanz says, the concept will disappear......IMHO

Workerbee999

Hi

Is it possible to actively contribute to a final salary scheme as well as a personal pension? My husband's final salary NRD is aged 63, so I imagine his pension would be reduced by approx 40% if he took it early at 55.

Could he instead start contributing extra to a personal pension to build up a pot of around £80k that he could then start taking out at 55 through the new arrangements, to make the most of his tax free personal allowance?

I have a deferred final salary pension kicking in at 60 and am currently working towards my defined contribution pot at 55 that we could now use to live on until then, but that way we are only making use of one personal allowance instead of two - so it would seem better to divert some of the savings into a separate pot for him if we can do this?

Thanks

paul5046

Workerbee999 wrote: »

Hi

Is it possible to actively contribute to a final salary scheme as well as a personal pension? My husband's final salary NRD is aged 63, so I imagine his pension would be reduced by approx 40% if he took it early at 55.

Could he instead start contributing extra to a personal pension to build up a pot of around £80k that he could then start taking out at 55 through the new arrangements, to make the most of his tax free personal allowance?

I have a deferred final salary pension kicking in at 60 and am currently working towards my defined contribution pot at 55 that we could now use to live on until then, but that way we are only making use of one personal allowance instead of two - so it would seem better to divert some of the savings into a separate pot for him if we can do this?

Thanks

http://www.hmrc.gov.uk/pensionschemes/understanding.htm#4

It would appear you can.

atush

Yes you can and many do.


They will be better than ISAs now for early retirement

zagfles

Workerbee999 wrote: »

Hi

Is it possible to actively contribute to a final salary scheme as well as a personal pension? My husband's final salary NRD is aged 63, so I imagine his pension would be reduced by approx 40% if he took it early at 55.

Could he instead start contributing extra to a personal pension to build up a pot of around £80k that he could then start taking out at 55 through the new arrangements, to make the most of his tax free personal allowance?

I have a deferred final salary pension kicking in at 60 and am currently working towards my defined contribution pot at 55 that we could now use to live on until then, but that way we are only making use of one personal allowance instead of two - so it would seem better to divert some of the savings into a separate pot for him if we can do this?

Thanks

Yes - but be aware of the limits in particular the annual allowance. These are quite hard to work out for final salary schemes, see http://www.hmrc.gov.uk/pensionschemes/understanding-aa.htm

Basically if you've got lots of years in a final salary scheme and you get a promotion/above inflation payrise you could could end up using your full annual allowance or much more (though see the carryfowards rules).

Workerbee999

Hi

Thanks for the quick responses - seems like a good idea then, subject to keeping within the annual allowances - which I must confess I find really confusing for final salary schemes. He's currently got 19 years in the pension and I think the combined value of his and employer's contributions per the statement is around £22k pa (although it is definately final salary - I think this is for info only & he is currently predicted a pension of £28k at age 63). So, I'm guessing it would have to be a pretty big salary increase to use up the remaining £18k in a year? Is that right? And even if it was we could use carry back of allowances relating to 3 years?

Also, does he have to contribute to a personal pension from his own salary or can I do it from mine but into a scheme in his name?

If we were to set one up is it SIPPs that we should be looking at or is that something else?

Sorry if I am asking daft questions! Thanks for your help

PennyForThem_2

paul5046 wrote: »

http://www.hmrc.gov.uk/pensionschemes/understanding.htm#4

It would appear you can.

Yes I do. I have various pension payments in my status of widow plus I am working for and contributing to NHS pension but I also contribute to a DC pension. And am I glad I did that now!!

I wanted extra that would kick in at 70 (long lived family, no health problems). So now I have total flexibility - how good is that!