Looking for Ideas/Suggestions regarding my Pension options please?

beansy

jamesd wrote: »

The increase in the state pension is 10.4% per year deferred and mostly inheritable by a spouse for those who reach state pension age before 6 April 2016. From that date the rate is 5.8% and it is not inheritable. Both increase with CPI. It appears that you have not yet reached state pension age [STRIKE]and won't do so before 6 April 2016 so you'd be under the new rules[/STRIKE] but will do in time to be under the current inheritable 10.4% rules.

Deferring for three to five or perhaps a few more years is a good move to boost income if you are in normal good health.

Leaving the AVC invested is useful if you don't need it but that investment doesn't have to be inside a pension. You could, say, take the 25% tax free lump sum and gradually reinvest that inside an ISA as protection against possible future increases in income tax rates. You could use flexi-access drawdown and use that as income to fund new pension contributions and build up another tax free lump sum, making a tax gain on the operation. Note that if you take anything beyond the tax free lump sum your annual allowance for pension contributions will be reduced from £40,000 to £10,000.

"Personal pension" has a specific meaning in pension language. It refers to the invested type of pension like your AVCs, but not associated with a company. You husband appears to have a defined benefit pension rather than a personal pension. No big deal because it's clear from context what he has but worth letting you know just so you don't accidentally give someone the wrong idea at some future time.

You're right about the actuarial reduction for defined benefit schemes. One useful approach that you two could take is for him to start a personal pension in addition to what he has at work. Then once that has sufficient value he can retire without having to draw on the defined benefit pension until its normal retirement date.

Another approach that can be taken is use of a mortgage, perhaps an equity release mortgage that allows drawing on money as needed then repaying later. You could draw on it for the years between both becoming retired and all pensions being in payment, then pay it off over say twice as long as the borrowing duration. This has the effect of shifting future income to the nearer future, increasing planning flexibility.

"Personal pension" has a specific meaning in pension language. It refers to the invested type of pension like your AVCs, but not associated with a company. You husband appears to have a defined benefit pension rather than a personal pension. No big deal because it's clear from context what he has but worth letting you know just so you don't accidentally give someone the wrong idea at some future time. Thank you, it's helpful to know the difference. Also, mine is a DB pension then, not a personal pension as I originally thought!

jamesd

That makes sense because it fits better with this that you wrote: "my private pension (£9,300), I also have a unit linked AVC". AVCs are the term for invested pots like personal pensions but associated with a workplace defined benefit pension. So your AVCs probably really are AVCs paid into a work pension rather than into a non-work pension. Not that there's any real difference in this case, it's all just investments under your control with you having real daily values for them and a pot that you own (well, technically the trustees own it, but it's your control).

Back in the old days of oh, maybe fifteen years ago, AVCs were the only way to get a directly invested pension pot because people were not allowed their own pension in addition to a workplace pension. So AVCs were introduced as a way to do that extra pension investing. All of that has changed now, people can have as many pension pots in as many different places as they like.

beansy

Thanks James and to everyone else who has contributed to my post.

Alter_ego

Perhaps someone could clarify the inheritance of extra SP in my case.
I have deferred my SP under the present rules,
My wife will reach SP age after April 2016 and she will be entitled to full SP via her own contributions, therefore presumably not a dependant.
If I die before her can she inherit any of my extra SP?assuming I have claimed my SP at the time.

xylophone

Perhaps someone could clarify the inheritance of extra SP in my case.
I have deferred my SP under the present rules,
My wife will reach SP age after April 2016 and she will be entitled to full SP via her own contributions, therefore presumably not a dependant.
If I die before her can she inherit any of my extra SP?assuming I have claimed my SP at the time.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181235/derived-inherited-entitlement.pdf

Read the above to identify your particular situation.

Alter_ego

xylophone wrote: »

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181235/derived-inherited-entitlement.pdf

Read the above to identify your particular situation.

Thanks, I had read that but hadn't taken enough notice of the title. Her pension will be in her own right so nothing will be inherited.

xylophone

Did you read pages 12-14 carefully? This concerns couples in

"Scenario 2" which is your situation?

Scenario 2: a. Dependant reaches State Pension age in single tier
b. Contributor reaches State Pension age OR dies in the
current system

Information about inheritance of ASP/GRB/deferred pension/pension cap?

Alter_ego

xylophone wrote: »

Did you read pages 12-14 carefully? This concerns couples in

"Scenario 2" which is your situation?

Scenario 2: a. Dependant reaches State Pension age in single tier
b. Contributor reaches State Pension age OR dies in the
current system

Information about inheritance of ASP/GRB/deferred pension/pension cap?

Yes, but she won't be a dependant. She will have a full pension in her own right.

xylophone

But look at "William and Joanna" (page 14) and para 41 re deferral?

You could ring DWP to check.

Alter_ego

xylophone wrote: »

But look at "William and Joanna" (page 14) and para 41 re deferral?

You could ring DWP to check.

I agree that seems to match my case, and I'd love it to happen. What make me doubt is the title of the paper on page 1.

I have rung DWP a couple of times recently to check facts, had totally wrong answers. eg They told me emphatically I could not defer after drawing SP for 7 yrs. I had to insist on speaking to a supervisor (they assured me it was a waste of time and he would say the same things) The supevisor finally admitted he did not know. I have now deferred.