Pension for wife (non-earner) help please!

PensionTech

Does that mean I should wait until March to do my wife's pension, or would it not make much difference?

You could wait until March if you wanted - the Budget is on the 16th so that leaves just under 3 weeks for you to sort out and pay into a personal pension for your wife before the new tax year, which should be enough time.

But I don't think any Budget changes will be immediate. A couple of years ago, the Budget had a lot to say about pensions, but the only things that took immediate effect were the relaxation of some tax limits (e.g. allowing people to take pension pots of maximum £10,000 rather than £2,000 as lump sums). Those changes didn't harm anyone's planning or really require much in the way of systemic industry changes. More or less everything else was delayed for over a year while they hashed out consultations and legislation.

The change to tax relief would be a major change. It would interfere with people's individual tax planning; it would alter the way in which pension providers and individuals reclaim tax relief, or the way in which employers provide relief via their payroll arrangements; it would probably have consequences for other elements of tax law such as the Annual Allowance. It would almost certainly need to be brought in via primary legislation, which would have to be debated and passed by both houses of Parliament. The argument for immediate implementation is fairly minor when you consider that people are already limited in what they can contribute to their pension each year, and although any change in tax relief is likely to see higher rate taxpayers scrambling to put in more before 6 April, they will be limited by both existing tax limits and their own personal circumstances, and the additional tax relief they gain from those contributions won't exactly bring the country to its knees. And, to be quite honest, I imagine a lot of higher rate taxpayers are already taking action; existing reports and the government's own consultation make it quite clear that they are looking for fat to trim, and whatever happens in the Budget, the announcement "More tax relief for higher rate taxpayers next year!" is unlikely.

I'd therefore be completely astonished if the upcoming changes to tax relief took immediate effect. I can't rule it out, of course, but I think the chances are infinitesimal.

(I do however feel like someone standing on a mountain holding a metal pole talking confidently about how unlikely one is to be struck by lightning.)

saver861

PensionTech wrote: »

I'd therefore be completely astonished if the upcoming changes to tax relief took immediate effect. I can't rule it out, of course, but I think the chances are infinitesimal.

Well if the OP waits and there is a 30% rate set, effective on the day, there would be an immediate gain of around £360. There would be a relatively short window to get it done but all the preparatory work should have been done so its just a few clicks for few phone calls to complete.

It all depends on what the changes are and date of implementation, but as it stands I would be waiting until the budget in similar circumstances as there is no advantage to the OP doing it beforehand (for tax relief purposes.)

GunJack

beanie414 wrote: »

How do you go about doing buying added years? Would I have to do that before April?.

don't know, I'm not an expert, maybe someone can give you advice on this aspect

beanie414

Okay, thanks, a lot to think about and read up on. I'm not ignoring you all but I am just off to work now.

neilvw

atush wrote: »

If you have a FS pension, and want to retire at 55-60, what is your scheme age? When you can take the pension w/o reduction? Will your AVC be large enough?

As your wife wont be 55 until after you get to 60, you wont be able to use her pension TFLS, so you might need more provision for yourself to bridge the gap?

The OP's wife won't be able to take her benefits until 57 under current Government plans.

neilvw

Regarding State Pension

Assuming your wife has no earnings or NI credits this tax year, her starting amount as at April 2016 will be the higher of

Old system: 9/30 x £119.30 BSP (= £35.79) + any SERPS etc
New system: nil (less than 10 years' NI)

So obviously the £35.79 + SERPS etc will be the higher. OP, do you have the actual pension amount accrued so far?

She has until 5 April 2019 to fill in gaps between 2006/07 and 2015/16 (and thus boost the starting amount).
She has 27 years approx from April until SPa to buy / earn further entitlement of approx £4.45 per week per year added, up to the max of £155.65 in 2016/17 terms.

SnowMan is good at working out the costs and may be able to shed further light, but perhaps best to wait until a few months after April when the starting amount is finalised. There is plenty of time.

gadgetmind

beanie414 wrote: »

How do you go about doing buying added years? Would I have to do that before April?

Is there no chance of your wife working in any capacity? Does she have any kind of hobby that could be a part time business?

beanie414

My wife checked this morning but we didn't get the interest on the First Direct account yet although we have the full amount so I assume it should be maturing in the next month.

I forgot to mention as well she is getting £10,000 from a family member this year. We were going to replenish our savings as we thought we would be spending our savings on moving house but now we could use it for other things.

neilvw wrote: »

Regarding State Pension

Assuming your wife has no earnings or NI credits this tax year, her starting amount as at April 2016 will be the higher of

Old system: 9/30 x £119.30 BSP (= £35.79) + any SERPS etc
New system: nil (less than 10 years' NI)

So obviously the £35.79 + SERPS etc will be the higher. OP, do you have the actual pension amount accrued so far?

She has until 5 April 2019 to fill in gaps between 2006/07 and 2015/16 (and thus boost the starting amount).
She has 27 years approx from April until SPa to buy / earn further entitlement of approx £4.45 per week per year added, up to the max of £155.65 in 2016/17 terms.

SnowMan is good at working out the costs and may be able to shed further light, but perhaps best to wait until a few months after April when the starting amount is finalised. There is plenty of time.

Ah, I thought you could only top up 6 years before?

It says on the letter that her state pension amount, based on NI contributions is £42 a week.

The basic SP is 9 qualifying years and is worth about £35 a week and the SERPs is about £7 a week.

gadgetmind wrote: »

Is there no chance of your wife working in any capacity? Does she have any kind of hobby that could be a part time business?

She might be able to, is it a good idea for her to do that? We don't know much about that type of thing as she has only worked in the charity sector for most of her jobs.

gadgetmind

beanie414 wrote: »

She might be able to, is it a good idea for her to do that? We don't know much about that type of thing as she has only worked in the charity sector for most of her jobs.

Well, anything she could earn would help, plus if she registers as self employed, she can choose to pay Class 2 NI even if not earning enough to have to. This costs about £130 a year and earns another qualifying year towards state pension. With the new single tier pension, this will be a screaming bargain as long as it lasts.

xylophone

If she took a job she would probably ( depending on income) pay /be credited with NI in the normal way and be eligible for a workplace pension as well.

https://www.gov.uk/national-insurance/overview

https://www.gov.uk/workplace-pensions/about-workplace-pensions