Retiring Dec 2015 what should I be doing?

mgdavid

Middle_Sister wrote: »

...... That's another reason to take the £250k and reduced the amount but I think I will still be a higher rate tax payer if I claim the state pension.

the HRT threshold for 2015/16 is £42385 so £30k + SP is within it - unless you have other income not so far mentioned.

kidmugsy

Middle_Sister wrote: »

[when] I die my spouse only receives half my pension.

(i) Check whether your final salary scheme offers "allocation" whereby you forgo some pension so that your husband would get a bigger pension after your death. That might be tax-efficient (we can't tell because you haven't told us much).

(ii) For that reason also consider leaving your non-Final Salary pension uncrystallised, or crystallised but with only the tax-free lump sum removed. Your husband, or other beneficiaries, would be able to inherit the remainder on favourable terms (the terms depending on your age at death).

Middle_Sister

atush wrote: »

Ok, first of all, is 250K your TFLS from the old FS pension? Which will cost you 20K per annum? It could be worth taking enough TF to bring yu down to BRT taking into acct the DC pot income as well.

What is the total of your DC pot today?

What does BRT mean?

Middle_Sister

jamesd wrote: »

How old will you be when you retire? Will you be retiring at the normal retirement age of the pension or earlier?

When do you reach state pension age?

What are your total amounts of savings? Investments? What is your income requirement? What are your overall financial objectives? Do you prefer to maximise inheritance or your own income? Do you have a spouse, if so what is their situation?

Assuming you're 55 or older it tends to be a good idea to put the maximum permitted amount into a personal pension because you can take out 25% tax free and from 6 April 2015 take out the rest as fast as desired. Using savings to do this works well.

That's a commutation rate of about 12.5:1 which is only a hair better than the awful civil Service commutation rate. Such poor commutation rates strongly favour taking the higher income because the break even period is short compared to normal life expectancies. If you wanted a lump sum it would be far cheaper to take out a mortgage or use equity release and use some of the higher income to repay that.

Cohort life expectancy for 65 year old women goes to about age 90 so you're likely to be substantially better off by deferring provided you reach sate pension age before the flat rate comes in and reduces the gain for those reaching state pension age after that point.

While you will be paying higher rate income tax on the higher incomes and not on lump sums that isn't sufficient to make taking the higher incomes the less good choice.

If your income is ample you could also consider deferring some, using VCT investing to get 30% income tax relief, capped at the amount of income tax you pay each year. Then after at least the legal minimum of five years you could sell, though eight or so years is more likely to be a good selling time. VCTs also pay tax free dividends and that's useful in your situation. In effect what this does is defer some of your income for five to eight years and give you some tax free income in the meantime.

What does VCT stand for?

atush

Middle_Sister wrote: »

What does BRT mean?

BRT, basic rate tax
HRT higher rate tax
TFLS tax free lump sum
VCT venture capital trust
SPA state pension age


there are more. WE used to have a sticky?

mgdavid

.. but the questions asked of the OP still stand....

atush

indeed......