We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Baffled
Comments
-
Of course. That 75% will be moot for income tax because he'll pay the same in tax as he gets in tax relief but he'll gain the tax relief on the 25% tax free lump sum.woolly_wombat wrote: »Even though he's still working and will be taxed on 75% of the fund?
If he's using a salary sacrifice pension scheme he'll also gain on the NI for the 75% as well as the 25%.
Yes. All deferring needs to do is be a better deal than an annuity and that's a pretty low hurdle to pass. The after 5 April 2016 rate is one that's been asserted to be around the actuarially neutral rate, so it might drop a little due to changing life expectancy but not a lot. Of course so would any annuity so it'll still remain ahead.woolly_wombat wrote: »Do you think it'll still be a good deal when he retires in 7 years time?0 -
Is his employer still paying into this specific pension? Not likely. If they are paying into some other pension that would just continue, it's not linked to what happens to this one unless this is the one they are paying in to.If my husband takes this cash does his employer, who claims to know little about pensions cease to contribute further?
This type of pension has no impact on the state pension unless the only payments into it were from contracting out of the salary-related part. In that case his basic state pension wouldn't be affected, just the earnings-related part. If his employer is paying into a defined benefit pension like final or average salary that does have an effect, it reduces it but the employer pension scheme ends up paying the amount lost from the state pension instead.And will THIS have ay impact on his state pension?
Ask your pension provider.And any advice on how to find what my pension pot consists of?0 -
Of course. That 75% will be moot for income tax because he'll pay the same in tax as he gets in tax relief but he'll gain the tax relief on the 25% tax free lump sum.
If he's using a salary sacrifice pension scheme he'll also gain on the NI for the 75% as well as the 25%.
The way the chancellor was talking in his last budget the personal allowance could well have increased considerably in seven years time and be well in excess of the state pension so some, maybe all, of the EL pension could be taken tax free.The only thing that is constant is change.0 -
The same would apply to any pension he paid into after taking the money from the Equitable Life pension, except that the income would be higher due to the extra tax relief obtained, all else being the same.
A higher personal allowance is one thing that's helping to increase the potential value of pension contributions vs say investing the same amount in identical investments inside a S&S ISA.0 -
The same would apply to any pension he paid into after taking the money from the Equitable Life pension, except that the income would be higher due to the extra tax relief obtained, all else being the same.
A higher personal allowance is one thing that's helping to increase the potential value of pension contributions vs say investing the same amount in identical investments inside a S&S ISA.
The current SRP is £6032 PA £10,600 shortfall £4568
PA 2020 £12,500 less shortfall £4,568 = £7,932 =£152 pw for SRP
It looks on those estimates that there wont be much difference in the surplus of PA over basic state pension.The only thing that is constant is change.0 -
zygurat789 wrote: »The way the chancellor was talking in his last budget the personal allowance could well have increased considerably in seven years time and be well in excess of the state pension so some, maybe all, of the EL pension could be taken tax free.
They are talking about increasing personal allowance, minimum wage, state pension and other quantities.
If these are mostly either index-linked or all increasing by some other common proportion the overall effect may be fairly similar to now.
One thing that does strike me as a possibility is to take this pension all in one go at retirement, while deferring the state pension for a few months or a year.
But the financial advisers will know better than me the chances whether that is likely to be worthwhile compared to just drawing gradually on this alongside the state pension.0 -
Very little information provided, as you say, but I believe a Minimum Retirement Age of 60 was standard for these Equitable Life with-profits policies.zygurat789 wrote: »And pensions are a very complicated subject and you have given next to no information.
When this pension was taken out your husband would have been asked for a retirement age, it looks like he said 60 which is why you are getting this list of options now.
Is this pension still being paid into by your husband and his employer, if the employer isn't paying into it it is nothing to do with him. Whatever your husband does with the EL pension will have no effect upon his state pension.
The original purpose of the pension was to provide income in retirement, has this changed?
See: http://www.equitable.co.uk/media/37409/general-information-leaflet-ra-45h166-415-v3.pdf0 -
It seems to me that people have been as helpful as possible given the information provided.
The OP has been asked whether or not she and her husband have obtained state pension statements.
She has been asked whether or not the EL Pension is her husband's only pension or if not, what other pension provision he has made.
She has been asked about her age and her own pension provision
She has been directed to information about automatic enrolment.
If she comes back with the information requested, it might be possible to make useful comments?
She has been directed to information about Pension Wise.
I meant that she's had a load of acronyms fired at her like SRP, PA, S&S ISA and ELAS WP. If she was confused by the original letter, she's probably not particularly aware and all the acronyms will be meaningless.
This board is great for advice - but the jargon may not make any sense to the people asking the questions.Early retired - 18th December 2014
If your dreams don't scare you, they're not big enough0 -
Goldiegirl wrote: »If she was baffled to start with, I reckon she is even more baffled now
She will be less baffled when she answers the Q's so others can work things out?0 -
She will be less baffled when she answers the Q's so others can work things out?
If she hasn't been frightened off by the jargon, I agree she'd benefit by supplying more information, but as long as she gets the replies in plain English and not a load of acronyms.
As I said before, this forum offers great information, but don't forget to tailor your response to the person asking the questions, otherwise they won't understand the replies.Early retired - 18th December 2014
If your dreams don't scare you, they're not big enough0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.2K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.3K Work, Benefits & Business
- 601K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards