Advice please

atush

s2p is state second pension which is earnings based and gives mroe on top of the SP. You wont have much as LGPS was considered contracted out but your OH might.

As for a salary of 23K, he can earn another 19K on top before paying HRtax, so he should drawdown that amt if you decide to go ahead and pay off the debt. But do say the interest rates as this is important to your decision.

jem16

Pickle29 wrote: »

What can he take when he is 55?
25% from each tax free?

As the rules stand at the moment, then yes he can only take 25% tax free from each pot. The rest would have to be used to buy an annuity or used for capped drawdown.

Can he take the total of the pots under £10k

No he can't do that until he is age 60. As the rules stand at the moment he can only take a lump sum using triviality (total of all pensions under £30k) or small pots under £10k each (maximum of 3) at age 60.

http://www.hmrc.gov.uk/pensionschemes/small-pen.htm#3

What can he do if he waits until april15?

Provided the new rules come into force then he would be able to take 25% from each pot plus the other 75% from each taxed as normal income.

Pickle29

Ok,
I thought he could draw all his small pensions as a lump sum if they were less than £10k at 55, I didn't realise that was only at age 60! Is this changing in April? The reason I ask is that I thought, and others have talked about the tax implications for taking the whole amount ( ie paying tax on the 75%)

Thank you all for responding, it's certainly given me lots of reading and homework and things to think about

jem16

Pickle29 wrote: »

Ok,
I thought he could draw all his small pensions as a lump sum if they were less than £10k at 55, I didn't realise that was only at age 60! Is this changing in April?

Yes it is changing from April 2015 provided the proposals get through as law. At that point (unless they bring in another change), you will be able to take the whole pot as a lump sum from age 55.

At the moment I'm afraid it is age 60.

The reason I ask is that I thought, and others have talked about the tax implications for taking the whole amount ( ie paying tax on the 75%)

Yes I saw that which is why I have given you the HMRC link. The important bit is;

When you can take your pension pot as a lump sum

You must be at least 60 years of age to take your pension pot as a lump sum.

You may qualify to take all of your pension pot as a lump sum if:
•one of your pension pots is worth £10,000 or less
•your total pension pots under all the schemes you belong to are worth £30,000 or less

If your pension pot is £10,000 or less there are different rules depending on whether you're a member of a company or public pension scheme, or a personal pension scheme.

Unfortunately the earlier posts were wrong in it being age 55.

Pickle29

Thanks, so basically at 55 he can take 25% of everything regardless of the amount tax free. From April the proposal is to be able to take all of it / the remainder if he wishes subject to 75% of it being taxable

But.. We have to think about the implications, interest rates, tax rates on top of his normal salary etc! Phew!

Reading the definitions I think they are DC not DB as he has had no statement since he left either company. The private pension with a friends life, he receives an annual statement and reading it I think it's DB but not really sure. I think he will have to ring them as he approaches his birthday!

With regard to mine, one is deferred not frozen and it says normal pension age is 65 but can applyy to take it any time after 50 but there will be a reduction!

Thanks again to everyone, this has been really useful :T

jem16

Pickle29 wrote: »

Thanks, so basically at 55 he can take 25% of everything regardless of the amount tax free.

The 25% is the tax free amount. He could also take the rest from age 55 but not as a lump sum, it would have to be as a monthly payment.

From April the proposal is to be able to take all of it / the remainder if he wishes subject to 75% of it being taxable

25% would be tax free. The remaining 75% would be subject to tax but that all depends on your total taxable income for that tax year.

But.. We have to think about the implications, interest rates, tax rates on top of his normal salary etc! Phew!

Yes you would.

Reading the definitions I think they are DC not DB as he has had no statement since he left either company.

That would tend to lead me to Defined Benefit (DB), not DC as you're thinking. With DC you would expect an annual statement.

The private pension with a friends life, he receives an annual statement and reading it I think it's DB but not really sure. I think he will have to ring them as he approaches his birthday!

Unless he worked with Friends Life (doubtful) this would be a DC pension.

With regard to mine, one is deferred not frozen and it says normal pension age is 65 but can applyy to take it any time after 50 but there will be a reduction!

I would imagine it would now be age 55 as the age changed in 2010. It could still be possible to be age 50 if it's a preserved age but pretty daft to lose around 75% of it taking it that early!

Pickle29

Hi jem
Thanks for this!

Will get OH to ring them all nearer his birthday before we make any decisions! I'm not thinking of taking mine early, someone earlier asked about my pension situation and I just looked it up!

Thanks again :j

atush

The reason I asked about scheme age was if you wanted to retire earlier than this. So you would need to make provision elsewhere for money to live on (such as a separate DC pension.

You didn't say the interest rates of your mtg and your debt repayment?