What does the Chancellors pension revolution mean for us?

paul5046

PennyForThem wrote: »

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!

Very good.
I'm thinking the same.

zagfles

Workerbee999 wrote: »

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 £22k is the "pension input amount"? This is the increase in value of the pot rather than what he's going get, and is the figure used for the annual allowance

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?

Not massive, for instance a £5k above inflation increase would add about £25k to the PIP, this is on top of the normal increase because of the extra year's service. But with the carryforwards you could still be OK - you can ask the scheme for the PIP's for the last few years if you don't already have them.

And even if it was we could use carry back of allowances relating to 3 years?

Yes.

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?

He contributes to his, you contribute to yours, you have your own individual limts where it comes to pensions. Of course how you support each other is up to you - for instance if you decide to put all your income into a pension and he decides to support you financially that's fine.

But be aware of the 100% income limit as well - this can't be carried forwards. You can't put more than 100% of your earned income into a pension (unless it's below £3600 when you can put £3600 gross in).

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

You could look at personal pensions if you don't want to choose what to invest in. They are generally a bit cheaper than SIPPs if you use the default funds - a SIPP is better if you want a wide choice of investments.

See Cavendish for personal pensions http://www.cavendishonline.co.uk/pensions/

For SIPPs I think HL are a good choice for small values http://www.hl.co.uk There are cheaper options once you have over £50k or so in. Fidelity are a bit cheaper but they don't currently allow drawdown directly - but all this could change with the budget changes. Although Fidelity don't have exit charges so you could always transfer out for drawdown.

Have a look at SnowMan's spreadsheet

https://docs.google.com/file/d/0BxA6Przq6KI1d0xvMDR0S1dLdXc/edit?pli=1

We also did one for drawdown charges though I can see that becoming out of date very soon...

https://docs.google.com/file/d/0BxA6Przq6KI1NVlKMlNMNE9jR2c/edit?pli=1

brainboru

I have a SIPP in drawdown and my trustee charges an arm and a leg on each of 5 tranches of my pension pot when he calculates my annual drawdown maximum pension. (I have less than £12000 in State/private pensions).

How soon can I sack him ??? Grateful any thoughts

gadgetmind

Hopefully these could all be combined once drawdown dates mean exactly nothing.

kidmugsy

brainboru wrote: »

I have a SIPP in drawdown and my trustee charges an arm and a leg on each of 5 tranches of my pension pot when he calculates my annual drawdown maximum pension. (I have less than £12000 in State/private pensions).

How soon can I sack him ??? Grateful any thoughts

Is it possible to get above £12k p.a. secured income by annuitising part of the funds and then taking the rest by flexible drawdown? Would you want to?

FLAPJACK

Just wondering if I have this right...

I am in receipt of a DB pension (I am 57 went at 49 ill-health..no reduction infact enhanced pension) I shortly after retiring was left a six figure inheritance.

Could I use a monthly sum from my inheritance to start a private pension and have the government add 20% to the monthly sum, then in a number of years I could cash in the "pension pot".

If it is possible then really a "new" pension could be used as a savings account being added to by 20% .

Something tells me I must have missed something!!

atush

If you have no earned income (ie not interest from savings or your pension), the max you can pay in per year is 2880 which will be made up to 3600 by TR.

FLAPJACK

Cheers atush,

Thought for a minute I could go to bed having discovered a way around the dismal interest rates!!

cepheus

I guess these changes will create a more competitive market for drawdown, this is the current situation with only Fidelity offering a 'free' service but surely this will change? HL look surprisingly cheap for the drawdown part.

Find the best Sipp for drawdown

gadgetmind

The way around low interest rates for cash is to take on a little more risk but you're still going to need a cash allocation for emergencies and/or rebalancing.