Final Salary Transfer?

Loughton_Monkey

Jetmarmite wrote: »

.....Loughton Monkey well done on retiring at 56. Your mention that your FS salary doubled in the last 8 years is interesting. Was it a pension you were still contributing to? In our case the pension has not been contributed to for many years and so far the annual increases have been exceptionally small (less than £100 a year) so I can’t see how ours would increase greatly before 60 unless there is something we are missing? I will investigate the projected increases in the future.

I was not contributing. I had long since left the company. I must say that the frequent values I requested over the years give a rather volatile and confused pattern. In my particular case, with hindsight, I would hazard a guess that the overall huge escalation in 'value' arose primarily because of startling increases in longevity between my leaving the company and becoming age 60.

If you consider that longevity will continue to increase, then regardless of all the other assumptions, your current ETV is based upon living for (say) 29 years after normal retirement. Just consider a scenario of, say, another couple of years being added before someone actually retires, then this can be a healthy increase in 'value'.

Jetmarmite wrote: »

.....Regarding the 40% tax at 60, my husband would still be taking his salary so if we take the FS salary pension at 60 which is when it is available with no reduction, then it would be treated as extra income and be taxed at the higher rate as he’s already over the 40% barrier. Whenever he actually retires then it hopefully wouldn’t be taxed as greatly.

In that case, I would seriously consider extra pension contributions to some pot or other to diminish, or avoid, 40% tax. Subject of course to lifetime allowances etc. Many people currently have (as I did) the opportunity to pay in at 40% tax relief, and draw it out at only 20% tax liability. It depends a lot on the scale of your earnings prior to, and after, retirement. I would hazard a guess that this little 'trick' will come to an end pretty soon. Osborne was reasonably generous with pensions before the election. What Gideon giveth with one hand, he will surely take away with the other...?