715,000 Millionaires in UK - are you one of them?

missyrichards

I used to have to go to Coutts (on the Strand I think) to deliver money from my employer. I felt very out of place when I was there.

moneyfoolish

My definition of wealth is what assets I have available that I can use if I wish without changing my standard of living. That rules out my house and my pension so cuts down my wealth dramatically from the definition under discussion!

BucksLady

The number of Billionaires is rising too

kidmugsy

jimjames wrote: »

It is identical for income but not for the capital value. You can't pass on the value of your state pension, you can do with a private one.

No, no, no: you calculate a capitalised value that allows for that.

kidmugsy

moneyfoolish wrote: »

My definition of wealth is what assets I have available that I can use if I wish without changing my standard of living. That rules out my house and my pension so cuts down my wealth dramatically from the definition under discussion!

So someone with a ludicrously extravagant standard of living can't be wealthy. Bottom of the class!

masonic

BucksLady wrote: »

The number of Billionaires is rising too

Yes, I'm sure they are. Tomorrow's headline: "People across multiple income brackets wealthier than they were 5 years ago in nominal terms. Inflation suspected."

kidmugsy

atush wrote: »

x20 I think, if pensions are included

We're not interested in the pretendy wee number that hmrc use, atush - it's presumably been adopted to favour government employees in calculations for the LTA. If you use commercial annuity rates, "x30" is more realistic though maybe a bit low for 60 year-olds. Tomorrow morning's paper should tell me.

racing_blue

Imagine three couples in their 40s with net worth of £1m.

1) rents a house, has no pensions, but have £1m in cash, bonds and stocks.

2) has a million pound house in London with a 60% mortgage, combined defined benefit pensions of £30K per year from age 65 , but live pay day to pay day with their current account hovering around zero.

3) owns a £300K house outright, has £350k in a SIPP, £250K in stocks and shares ISAs and £100K in the bank.

They are all millionaire households. Who feels the wealthiest? Actually I suspect that households like 1 and 3 are as rare as unicorn poo - why is this??

chucknorris

kidmugsy wrote: »

We're not interested in the pretendy wee number that hmrc use, atush - it's presumably been adopted to favour government employees in calculations for the LTA. If you use commercial annuity rates, "x30" is more realistic though maybe a bit low for 60 year-olds. Tomorrow morning's paper should tell me.

I agree, I actually only use x27 on my spreadsheet, but only because I prefer to be on the conservative side, I know some would value it more than x27, and with some justification.

They do vary a lot though, e.g. mine is inflation linked, and if I die first my wife gets the pension with an adjusted accrual from 1/60th to 1/160th after my death.

racing_blue

As I understand it, the capital value of a defined benefit scheme pension is worked out by multiplying the annual scheme pension payable at the outset, by a relevant valuation factor which is usually 20.

So, unless a non-standard factor is being used, the crystallised value of the pension is calculated using the following formula

20 x P

P = the amount of pension which will be payable to the member in the first 12 months of payment (or entitlement), assuming that the pension rate at the point of payment continues throughout the period.

Example:

John is entitled to a scheme pension of £10,000 per annum under his (defined benefit) occupational pension scheme. Using the conversion factor of 20:1, the crystallised value of that scheme pension for lifetime allowance purposes is £200,000.

Jane's pension also allows for a tax free lump sum equal to 3 years pension payments. Her conversion factor is (20+3):1. If she was entitled to £30,000 per annum under her defined benefit occupational scheme, the value for lifetime allowance purposes would be £690,000

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I'm looking to achieve balance between these different sorts of wealth: property, pension, financial (I'm not so concerned about physical). I think 30:30:30:10 would be a very fine mix, would sleep real easy with that