Pension Numpty!

TH1878

happyandcontented wrote: »

Does anyone plan it?:D

I do have death in service benefits and assume any job I take in the future will also have them. My point is that this is money that if it was in a plan outside an f/s scheme it would be mine to do with as I wish and to leave to whom I choose. Left in the scheme it dies with me except for a half spousal pension which also dies with them.

Quite right but what if you don't die early?

You've missed out on a lifelong, secure, inflation-protected income and there may not be much of the pot left to leave to other beneficiaries anyway at that point.

I'm not saying it's wrong but don't transfer on that basis alone.

If you're in good health, you may just be better to write a Whole of Life assurance plan and place it in trust for your spouse and other beneficiaries (children?). You could use some of the pension income to pay the premiums.

What I will say is that most people underestimate their mortality age.

jem16

happyandcontented wrote: »

the final salary scheme transfer value is ......£640,000

What you haven't said is what the actual benefits are that your scheme will provide?

So what is the annual pension on today's value and what will it be on retirement? Is there an automatic lump sum too and if so how much?

atush

And do you have a spouse, and are you of normal good health? Any genetic predisposition to certain diseases?

happyandcontented

Benefits are a pension which I could take now at 55 of £15,000 or a lower sum c £12,000 and £81,000 tax free.

Or a projected pension of £25,000 at 65. No lump sum mentioned there. On death £60,000 currently, and a half spousal pension.

I am in good health, but there is a genetic heart issue predisposition but I was recently checked out and found to be fine. I do have a spouse.

atush

Find out the LS at 65.

as for the 225K in DC pots. that means over 56K tax free lump sum, and approx 168K to draw down. Using DD to pay yourself tax free using your PA, instead of commencing your DB pension is a wise idea.

What pension provision does the OH have, I have forgotten if you said.

happyandcontented

My spouse has very little in terms of a private pension. A few years Civil Service one and by the time of retirement 14 years in an LEA scheme. Full SP though I think.

I eally only started looking into my pensions because of my settlement issues, which are not yet resolved. I probably won't touch any the current pot if I get a new job or take an internal job (which would mean sacrificing the settlement obviously) but would want to be able to acess to the sum paid in as part of the settlement, which I understand could be equal to my yearly salary using unused years?

happyandcontented

I called in briefly to see my IFA and apparently there has been new legislation passed which means they cannot advise on the final salary scheme. They can pass me to another member of staff but they did say that if transferred the lump sum entitlement now would be £158,000 as opposed to the one quoted above (£81,000). This does interest me because prior to all the current issues - settlement, knowing pension pots, I had intended to invest in a student buy to let for my daughter from next year. That type of sum would mean I did not need to borrow anthing to fund the purchase.

How would an IFA view that as a reason for transferring from such a scheme?

dunstonh

I called in briefly to see my IFA and apparently there has been new legislation passed which means they cannot advise on the final salary scheme.

Defined benefit transfers under advice have required a pension specialist to advise on them before other recent changes. It sounds more like an internal change.

How would an IFA view that as a reason for transferring from such a scheme?

Depends on how it impacts on your needs and what other levels of income you have as well as how much experience you have as a property landlord. Borrowing for a buy to let can actually be tax efficient and interest rates are low. Whereas drawing out a lump sum (beyond the TFC) from the pension is not tax efficient. Student buy to lets tend to be higher maintenance but buy one cheap, do it up and have it in the right area it can make good money. Experience and knowledge is important to get those to work. The days of a blind monkey being able to make money on property have gone.

happyandcontented

Strange, the advisor definitely said it was an external change which had only very recently happened and something about the other staff member having an older qual (G6?) which meant that they would be allowed to do it.

No property experience, but will definitely buy in the very defined student preferred area of a university town with three universities in the vicinity. Looking to spend about £120,000 which my research shows should get a decent 3/4 bedproperty. We live reasonably close by and know the area well.We also have a letting agent in the family should we decide to go down that route.

We did intend to remortgage to fund this but the cash buyer option due to the pension pot looks attractive.

greenglide

We did intend to remortgage to fund this but the cash buyer option due to the pension pot looks attractive.

But the tax efficient way, surely, is to take out a BTL specific mortgage on the property as the interest can be offset against the profits?