Are pensions capital?

jem16

r_i_c wrote: »

In 2012 I had an estimated £59k TPS pa.

I'm sure you don't mean £59k per annum. If the estimate was £5.9k per annum it agrees more or less with my figures.

Oh! I thought the lump sum was all part of it, but you are suggesting it's either/or?

Pre 2007 scheme, it's age 60 with annual pension and automatic lump sum of 3 times the annual pension.

jamesd

jem16 wrote: »

As you are a member of the 1/80ths scheme with a Normal Retirement Age of 60m you will get both the lump sum and the annual pension. The lump sum is automatic and you cannot decide not to take it.

What jamesd was describing is the 1/60ths scheme (post 2007) which does not come with an automatic lump sum and you have to commute some of the pension to get it. This does not apply to you.

Thanks for the correction!

So that appears to be around £5.9k income plus £17.7k tax free lump sum so far towards working out the income possibilities until state pension age.

Mojisola

r_i_c wrote: »

Sorry, I don't mean that, I meant 'read' in the old fashion sense of formally reading the Will - as if probate had been granted and those mentioned in the Will were being read out what was due to them.

I don't think that ever happened except in Agatha Christie books and American films.

The beneficiaries usually get a letter from the executor/s saying that they have been left a legacy.

robber2

r_i_c wrote: »

But I still have the SIPP which I don't have to draw till State Retirement age (for me 66 I think?).



Thanks again.

There is no requirement to draw from your SIPP at State Retirement age !

robber

jamesd

r_i_c wrote: »

But I still have the SIPP which I don't have to draw till State Retirement age (for me 66 I think?).

I looked up the rules on this and created a new post to make it easy for us to refer to them in the future. You can find the rules in DWP benefits and pension freedom.

r_i_c wrote: »

Now, I'm told there is a cap on paying into the SIPP for me, about 3k pa? If I have capital over that figure, in respect of probate after it is granted, what is preventing me from opening one or more ISA's please?

For a person with no earned income (from a job or self-employment) the limit is £2880 net, £3600 after tax relief.

r_i_c wrote: »

My mother had her pension plus a half of my father's coming in. I am however named as receiving 'the balance of the estate' which would cover mum's pension - but I assumed the balance only referred to savings (capital) already generated by her pension - not that her (state and professional) pensions would somehow be transferred to me intact?

Your assumption is probably right. Most older pensions are paid from annuities or work defined benefit pensions or the state pensions and those don't get inherited except by a spouse. It's the more modern personal pensions where income can be taken from a pension pot using income drawdown that can leave an inheritable pension pot. She might also have had a pot of that type where she hadn't bought an annuity yet and you'd inherit that, probably.

r_i_c wrote: »

10% of what please?

The total capital value of all of your savings and investments, including your own SIPP.

Once we know all of the numbers it'll be possible to draw up an income plan for you that'll show how much you final state and teachers' pension income will be and how to get that level of income before the state pension starts. Or as close as possible to it. Maybe more, depend on just how much money you end up with.

At the moment it looks as though you'll have around £5,900 a year each from the TPS and the state pension, assuming that you are entitled to the full basic state pension. So perhaps £11,800 a year, most or all of which will be tax free. But this is just educated guesswork until we know your state pension situation.

The TPS lump sum that I'll assume is going to be £17.7k can be used to give around £17.7 / 6 years = £2950 a year of income before state pension age just by spending the lump sum gradually. So that plus the ongoing TPS is around £8,850 a year to live on from when the TPS starts. Plus whatever you inherit can provide, less what you need for the year until you reach age 60 and whatever you need for debts; we haven't really discussion those much yet but later we'll need to to get a proper plan.

r_i_c wrote: »

There is also a tiny amount with the Prudential due to a misunderstanding that the pru was 'backyears', it wasn't. What they got from me - before my father spotted it - came to £6.5k pension pa in 2007. I can write to both Pru and TPS requesting a 2015-16 estimates for retirement age 60, I definitely appear to be in that sixty year age bracket.

Definitely do that. The Pru is particularly interesting because we didn't know about it and it's another nice piece to add to the solution to your income needs. It's possible that like the SIPP you might be able to take the Pru money before age 60 if necessary.

r_i_c wrote: »

Have a SIPP of approx £40k (invested in stocks & shares) which I would presumably transfer to an ISA at state pension age?

You could but normally you'd take 25% as a tax free lump sum and some ongoing income from the rest. Or in your current case, you can draw on it to help your income. I'll add this £40k to the plan from the earlier paragraph and here's now it looks so far:

A. Draw 25% tax free lump sum from your SIPP, £10,000, and use that for income. Also draw £1,800 from the remaining 75%. This is to get you to the presumed £11,800 of income that you'd have form state pension age. Just presumed, we don't know yet. We need to know how many months until you reach age 60 to plan properly because it's so close. I'll assume exactly 12 months.
B. The remaining SIPP £28,200 is used in part to provide an extra £2,950 a year for the six years from age 60 to state pension age, topping up the £8,850 from earlier to the £11,800 level.
C. That leaves £10,500 of the SIPP not allocated yet, and also the whole value of the inheritance not allocated yet.

Hopefully you can see how the income plan is coming together now and how we can build on it later as we know more about what you'll get.

r_i_c wrote: »

Any capital from probate would presumably go to ISAs as well because ... I'd be over the 16k limit for JS allowance between when probate is hopefully granted and the state pension retirement age?

Yes, partly cash ISA, partly stocks and shares ISA (to get a higher income) and partly peer to peer lending, to get an even higher income. A mixture, to combine the benefits of each thing. We can explain them, don't worry about this yet.

r_i_c wrote: »

Oh! I thought the lump sum was all part of it, but you are suggesting it's either/or? Then I agree, it's much safer to have a steady amount coming in - those DDs never stop :-o

You were right and I was wrong, you're in the one where you don't get to choose.

r_i_c wrote: »

Had no idea you could pay voluntary self-employed NI into a state pension. I don't know how this would be done though? And I certainly didn't know I could continue buying back years at this distance in time from when I stopped being (against my better instincts I might add) a full time teacher - back in 2002.

You can buy past years for years when you weren't paying in, going back six years from the current year. So you could buy at least that many if you need to. But some benefits also get you years, so you might not need to. On this we'll just have to wait for your state pension statement to know what you do or don't get/need to do. We can explain about the self-employed contributions later if you will benefit from doing that. Same for buying back years, we can explain more once we know if it makes sense.

Things are gradually looking better for the income plan. I hope that you could live on £11,800 tax free. If not, let us know what you really need.

jackyann

OP - it's not clear whether you want or are expecting to return to full-time work (although I do realise you won't have had time to think about it much)
I would also look at calculations involving a small amount of casual / part-time work.

r_i_c

jem16 wrote: »

As you are a member of the 1/80ths scheme with a Normal Retirement Age of 60m you will get both the lump sum and the annual pension. The lump sum is automatic and you cannot decide not to take it.

What jamesd was describing is the 1/60ths scheme (post 2007) which does not come with an automatic lump sum and you have to commute some of the pension to get it. This does not apply to you.

Thanks, sorry, there's so much information coming in I'm finding it hard to get my head round everything, but please keep the information coming Things are sounding a lot more positive than I feared 24 hours ago. The CAB left me with the age figure of 66 and I was preparing myself for seven years until I reached any form of secure, regular income.

This forum is good news indeed :]

r_i_c

Mojisola wrote: »

I don't think that ever happened except in Agatha Christie books and American films.

Indeed so

r_i_c

jackyann wrote: »

My sympathies.

Of course you need to deal with the funeral, I hope it goes well, tidy up loose ends, and go along to the Job Centre, both to arrange a return to work, and to get your NI credited.

Thank you. I may have this wrong, not sure. After the 6 months JSA(C) I would be within a few months of achieving my 60th birthday. I wouldn't still sign on after taking up my TPS pension or would I please? I shouldn't think so though. Would it be possible for me to pay my own NICs to cover the remaining months up to 60? There is confusion in my mind here as well because the NICs go towards the state pension which for me would start at 66 I believe. So NICs between age 60 and 66 are a grey area for me currently.

I would also get in touch with the local branch of the Carers' Association (or similar). They can be a great support in your circumstances, which are not uncommon when someone of working age has been a long term carer.
There are some things you can spend your capital on that may be helpful, and don't count as deprivation - they will usually put you in touch with people who understand the detail of this.

Thank you.

As executor, you can charge reasonable expenses to the estate, so that winding up your mother's affairs shouldn't eat into the money you do have.

Yes, I hadn't realised this but the Funeral Director after agreeing to submit the funeral bill to the estate bank suddenly demanded an up front deposit from me. My dear mother's funeral with the poor lady's mortal remains in their funeral parlour. I felt I had no option but to pay - and out of my own pocket. But then I presented the receipt for the deposit to the bank and they agreed to honour it, hopefully by the end of this week.

I have also known people who found the people who administer teachers' pensions very helpful in difficult circumstances, so I would certainly talk to them if you think you might claim at age 60.
I would also check your total NI contributions so that you are sure of your state pension later.

I must write on both accounts, thanks again!

gadgetmind

r_i_c wrote: »

Although I'm actively looking, it's unlikely I'll pick up employment before the allowance expires which would oblige me to apply for JSA.

Don't be so sure. Given the very low levels of unemployment, and the rebound in the economy over the last few years, employers are getting desperate and are having to fight over anyone with even basic skills.