AVCs question

Dunnit

You are on the right path. If she does not claim her pension until 65, (consensus on here tends to suggest it is best to leave a DB pension until it can be drawn without penalty) she could put £70k into a pension and draw £14k tax free for 5 years.

That is £10.5k tf allowance from 15/16 plus 25% tf = £14k.

xylophone

If she does not claim her pension until 65, (consensus on here tends to suggest it is best to leave a DB pension until it can be drawn without penalty)

Has it not been established that her TPS NRA is 60 so that she can draw her pension without penalty then?

With regard to her State Pension Age she can check here

https://www.gov.uk/calculate-state-pension/y

She will draw her state pension under the new scheme.

https://www.gov.uk/new-state-pension/overview

tigerspill

xylophone wrote: »

Has it not been established that her TPS NRA is 60 so that she can draw her pension without penalty then?

With regard to her State Pension Age she can check here

https://www.gov.uk/calculate-state-pension/y

She will draw her state pension under the new scheme.

https://www.gov.uk/new-state-pension/overview

Is it not the case where pension paid up to the change is protected and available in full at 60, but the "new" pension part is available at 65. So if taking at 6-, there will be an actuarial reduction of 5 years on just the new part?

jem16

Backbiter wrote: »

Looking at those, she missed out on the 1.4.2012 cut-off date by about a year, so she is a 'tapered member', not a 'protected member'. But, having joined the TPS in 1985, her NPA therefore remains 60, not 65 as she's been informed. Confusing.

It would never have been 65 - it would be her state pension age which is likely to be age 66.

However if she's got tapered protection and only misses out by one year, she will stay on the final salary scheme until 2020 according to the table.

The majority of her pension will be final salary at age 60. She can retire at that point with unreduced benefits on that part. The rest she can take at age 66 - will only be about 2.3 years worth. Meanwhile she could use her AVC pot to supplement her income.

You mention AVCs but they obviously aren't that as they are not deducted from her salary so Free Standing AVCs are probably nearer the mark. No problem with her using either that or a PP/SIPP and gaining that higher rate tax relief - remember though that she'll have to claim back the higher rate tax relief from HMRC as she won't get it automatically. Hopefully she has been doing that?

xylophone

OP says that his wife is 51 so was born in 1963 or 1964.

SPA will be 67.

http://www.nidirect.gov.uk/changes-to-the-planned-increase-in-state-pension-age

Backbiter

jem16 wrote: »

You mention AVCs but they obviously aren't that as they are not deducted from her salary so Free Standing AVCs are probably nearer the mark. No problem with her using either that or a PP/SIPP and gaining that higher rate tax relief - remember though that she'll have to claim back the higher rate tax relief from HMRC as she won't get it automatically. Hopefully she has been doing that?

No - she's never had to do a tax return, but will obviously be claiming the HRT relief she is due. As you deduced, she took out FSAVCs,

Thanks for all the really helpful advice. We've learned a lot of stuff we didn't know that has helped clarify our options.

I think that upping her AVCs to around £150pm will be a wise move, and will build up a decent fund over the next 9 years.

Backbiter

xylophone wrote: »

OP says that his wife is 51 so was born in 1963 or 1964.

SPA will be 67.

http://www.nidirect.gov.uk/changes-to-the-planned-increase-in-state-pension-age

Yes, it will be 67.

Backbiter

tigerspill wrote: »

Is it not the case where pension paid up to the change is protected and available in full at 60, but the "new" pension part is available at 65. So if taking at 6-, there will be an actuarial reduction of 5 years on just the new part?

That's my understanding, too.

jem16

Backbiter wrote: »

No - she's never had to do a tax return, but will obviously be claiming the HRT relief she is due. As you deduced, she took out FSAVCs.

There is no need to do a tax return just to claim higher rate tax relief. A simple phone call to HMRC who will adjust the tax code will suffice.

However what I meant was how long has she been a higher rate taxpayer and has she been claiming for that extra tax relief since then.

Backbiter

jem16 wrote: »

There is no need to do a tax return just to claim higher rate tax relief. A simple phone call to HMRC who will adjust the tax code will suffice.

However what I meant was how long has she been a higher rate taxpayer and has she been claiming for that extra tax relief since then.

Not long. She got promoted last year, but I think the change in the Higher rate threshold the other year brought her into that band. Could be wrong though.
So a simple phone call will suffice? That's good to hear.