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

chucknorris

racing_blue wrote: »

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

As kidmugsy said though the x20 is just a figure that the tax man pulls out of the air. If you can find me an annuity (you won't) that pays 5%, and is inflation index linked and passes benefits onto your spouse, let me know, because I will definitely buy it.

bigfreddiel

racing_blue wrote: »

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??

Wife and I are in 3 plus 10% on the figures you used, and that's not counting our pensions we are already taking. Never had a job that paid more than £32k and my wife about half that.

How's it possible to do that, well we don't shrimp on things, but we don't spend needlessly. For example we run 2 cars, one is 20+ years old and the other is almost new, it's only 15 years old, combined mileage of 270,000 miles.

Another tip, we use a local insurance broker for cars, home and contents. I've never been able to get it any cheaper on these comparison sites.

We don't waste food, everything gets eaten, if not on the day, then for lunch the next day.

It's not hard to do this and I often wonder what people who earn two or three times my income do with their money!

Cheers fj

bowlhead99

bigfreddiel wrote: »

well we don't shrimp on things, but we don't spend needlessly.

We don't shrimp either. No point being stingy to put money away just for the halibut. But when I find myself with some spare, I'll try to a keep few squid to one side otherwise I might be floundering in later years.

kidmugsy

You're not the sole man capable of jokes like that, old trout.

Chickereeeee

bigfreddiel wrote: »

There's been a 40% increase in millionaires since 2010, so now one in 65 are a millionaire.

As far as I can tell from the article the definition of millionaire is by household and includes property I.e. The house you live in.

Well if that's the case my wife and I are now millionaires.

So how many of the remaining 713,999 are on this forum?

Cheers fj

Millionaire HOUSEHOLD or 2 x millionaires (ie £2M assets between you)?

C

pafpcg

chucknorris wrote: »

If you can find me an annuity (you won't) that pays 5%, and is inflation index linked and passes benefits onto your spouse, let me know .....

Class3A Voluntary Contributions? >6% return, linked to CPI and 50% for a surviving spouse. BUT available only if your State Pension Age is before April 2016 and there's a maximum limit of £25 per week. (In addition, you can only buy the "annuity" from already-taxed funds - it can't be bought directly from a pension fund to avoid tax.)

chucknorris

pafpcg wrote: »

Class3A Voluntary Contributions? >6% return, linked to CPI and 50% for a surviving spouse. BUT available only if your State Pension Age is before April 2016 and there's a maximum limit of £25 per week. (In addition, you can only buy the "annuity" from already-taxed funds - it can't be bought directly from a pension fund to avoid tax.)

That doesn't sound like something I can invest a lot of money in though. Is this what you buy if you are some years short of the minimum for a full state pension? If so, I already plan to buy the 2 years that I am short anyway. Or is this something else?

Arthurian

I do think it's incorrect for a married person to say "We're millionaires," when the couple have only a million between them.

atush

yet if you are divorced, and have to run 2 full households, your outgoings would double?

racing_blue

bigfreddiel wrote: »

Wife and I are in 3 plus 10% on the figures you used, and that's not counting our pensions we are already taking. Never had a job that paid more than £32k and my wife about half that.

How's it possible to do that, well we don't shrimp on things, but we don't spend needlessly. For example we run 2 cars, one is 20+ years old and the other is almost new, it's only 15 years old, combined mileage of 270,000 miles.

Another tip, we use a local insurance broker for cars, home and contents. I've never been able to get it any cheaper on these comparison sites.

We don't waste food, everything gets eaten, if not on the day, then for lunch the next day.

It's not hard to do this and I often wonder what people who earn two or three times my income do with their money!

Cheers fj

That's quite amazing. >£1m without ever taking home more than about £30K per year. And that is not even including pensions.

I take my hat off to you and imagine there must be a bit more to it than driving old cars and eating your leftovers!?