Just lost out on early severance package - What Now

AnotherJoe

So you say you can retire soon on 43%, give it a year or two more and I reckon you'd be able to get to 50% or be eligible in the next round of voluntary severance.

If you could retire on 50% of salary, then consider that you will pay less tax, no NI, no pension, no buying suits, no season ticket, out of that. That will probably by itself get you to the mystical 2/3 of pay number.

And each year you work now is a multiple bonus. You aren't withdrawing from a pension, you are upping the rate from 43%, you are saving a bit more, so think on that, it may help you hang in for a year or two more. I'm in a very similar position, I'm giving it two years then I'm done though I could retire right now and cope financially. But there's always a chance of a nice redundancy package in those two years

traineepensioner

Hi Jerry, Welcome to the forum & commiserations on missing out on redundancy.......I applied 3 times but they just wouldn't let me go

Does your pension provider run an AVC scheme? Before I took early retirement I was able to add tax free payments from my monthly salary into an AVC which was linked to the final salary pension scheme. These payments allowed me to take a greater tax free lump sum (max 25%) while still retaining enough pension to retire early ....despite the painful actuarial reduction

Early retirement takes careful planning. I started planning age 48 and retired at 54......absolutely no regrets :j

atush

jerrysimon wrote: »

Agreed the 140K access should be a last resort thanks.

As stated my outgoings are about £1300 a month. I think a trial run is a good place to start. Waiting to see what happens until Sep seems like a sensible way forward and means six more months of full pay

Jerry

This is why 1, I thought you needed another emergency pot in cash, but given you can withdraw your 140K cash sure you could count it- but you'd need an equivalent amount (ie emergency provision not the whole 140K) then in an actual cash pot as opposed to tied to the mtg pot. Given this would mean mtg payments again, I think it defeats the purpose.

2, the whole once you've ACTUALLY (rather than virtually) paid off your mtg with that offset, you still need a cash emergency supply. So you still need to save it.

So you cant really count the 140K you are putting against the mtg now, and will be using to pay it off later


If you have a DB pension, 6 months outgoings is fine as emergency savings, but in Drawdown you really need 2 years outgoings. So that you dont draw money from your pot when markets are down. As that will severely affect the money you can draw in future if you had to. And this, more or less in itself, explains why a DB pension is superior to a DD one.

AS with a DB pension you are not exposed to market whims, or even crashes. you wont have to worry about Brexit, about China etc. You wont have to hold 2/3 years income in cash.

kidmugsy

jerrysimon wrote: »

First grandchild expected in a few months ... wife is leaving part time work then and will eventually do some child care 1-2 days per week. She has small pension 3K, 15K lump sum (aged 65) and we will both have full state pensions payable at 66.5.

(i) Hurry up: in this tax year fill up a pension for your wife e.g. a SIPP. Calculate the maximum contribution as follows. From her earnings subtract any other pension contributions she's made. Multiply the result by 0.8. That's the amount of "net contribution" she can make this year. The exception is if the answer is less than £2880, in which case £2880 is the max net contribution she can make. Borrow money from the mortgage if needs be.

The advantage is that for the next few years she's going to be a non-taxpayer so she can draw out from the pension the amount she contributed plus 25%, and get it all tax-free. That 25% will be pure profit. Then next tax year she repeats, though this time her max contribution will be the £2880, and so on until at age 66.5 she will perhaps become a taxpayer and the procedure is less valuable.

(ii) The diabetes: how much of a reduced lifespan can you expect?

Kynthia

OldBeanz is Classic+ just people who kept their years in Classic while moving on to Premium when it came out? If so then I believe Classic+ and Premium look back 13 years for your best year of salary while Classic only goes back 3 years.

All of these use the full time equivalent salary so going part time won't detrimentally affect this. Reckonable service for the time you are part time is pro-rated instead, which would have a minimal effect in this case.

robin61

I could have written some of the posts you' ve had from others. I totally agree. I am 55.
1) each year at work now means 5% less actuarial reduction to my DB pension plus 1/90th extra contribution. I have found this gives me a different mindset and knowing if things get really pressurised I could apply for the next early leaver scheme or even walk without one if absolutely necessary is a great coping strategy.
2) making the most of my empolyers AVC scheme. It' s some time now since I paid any 40% tax. This will boost my TFLS to the max without impacting my pension and depending on how long I stay there are various options for any residual AVC fund.
3) my wife doesn' t work but has a SIPP so I am paying £2880 into that for her every year. She won' t pay tax on her income as it will be less than £11k per annum. She does not need to take it while I am still working so each year i work provides her with a bit more.
4) I took out a small FSAVC in the past and that has been transferred to a SIPP. Hopefully there is enough in there to fund a couple of years of deferal of my main DB scheme. The 10% extra DB pension that will provide me is better than any annuity I could have bought and I should be able to get most or all of it out tax free.

Knowing you have your ducks in a row and that there is light at the end of the tunnel makes it a lot easier to accept and cope with a job you are not enjoying.

jerrysimon

Wow you are a helpful bunch. I feel like info over load though lol

I am currently 55 as well 56 in Sep.

I am on the CS "classic" pension. Re savings obviously that would be covered by a lump sum of around 50-60K depending on when I leave. I currently have 38 years service so will have 40 before I am 58. One of the uncertainties is knowing if to increase my lump sum and reduce pension. This may be worth thinking about if I have a shorter life expectancy given that would not effect my wife in that her share if I was to die is still based on the original annual pension figure. I also found out recently at the pre-retirement course that the pension is also guaranteed to pay out for the first five years if I was to die during that time.

My wife earns 8K but is stopping in September probably. I have moved her 1K tax allowance across to me this month.

I am a smiggin below being a higher rate tax payer

Although I could put extra money into a pension I am concentrating on clearing my car loan (interest free) and another small debt on an interest free CC.

I have no idea about what a SIPP is and looking on line it looks a little complicated. Should I be looking at setting one up for my wife, using funds from my mortgage equity ? I guess the trick is to make use of her unused tax allowance ?

Knowing I "could" walk out the door tomorrow if I want to is a nice feeling. I really have nothing to complain about I am in a great position. This whole process I guess has been good as it made me look seriously at my financial position and what I want in retirement. I certainly don't hate my job. Its more I am at a point where its becoming tedious and I lack any enthusiasm to deal with all that comes with managing people and the next crisis.

Regards

Jerry

atush

Although I could put extra money into a pension I am concentrating on clearing my car loan (interest free) and another small debt on an interest free CC.

I have no idea about what a SIPP is and looking on line it looks a little complicated. Should I be looking at setting one up for my wife, using funds from my mortgage equity ? I guess the trick is to make use of her unused tax allowance ?

Why not put more into the pension? It would get 25% return immediately? Rather than paying off debt with no interest at all? 0% return?

When does the IF deal end. It was silly to spend all your cash w/o retaining an emergency pot.

A SIPP is a self invested personal pension. It can be complicated if you are an investor who likes to play around, but it can be VERY simple if you use a lifestyle fund such as Vanguard series or a global tracker.

Rustle up a little enthusiasm for your work. At least until you pay off debt, and add more to your pension.

robin61

If you wife becomes a nil earner you can still put £2880 per annum into a SIPP for her and it will get tax relief added automatically so topped up to £3600. Atush is right it can be really simple.

She will not be able to get at the money until she is 55 and 75% of it is taxable at her marginal rate. However from April your wife will have £11k personal allowance before she pays any tax.

You circumstances sound very similar to mine we are the same age and I have also worked for the same company for 38 years.

You might also want to look into whether you can invest in an AVC linked to your company pension to boost your own TFLS when you retire. If you can do it by salary sacrifice you will get 20% tax relief and 12% NI relief.

It' s these little advantages that makes working the last few years seem worthwhile. I am like you I don' t absolutely hate what I do but I have lost enthusiasm and to be frank there are other things I would rather be spending my time on. So it is worth making a few sacrifices now to be able to stop working a bit earlier.

jerrysimon

My wife is 55 in october. I checked her payslip and she has earned £8196 this year and contributed £480 to her pension.

Based on this how much can I put in a SIPP before 1/4/16 and get tax relief, £1424 ?

I guess if I do the same next year I can then put in another £2800 ?

I have looked on Hargreaves & Landsdown and can open one on line ?

Regars

Jerry