Just lost out on early severance package - What Now

jerrysimon

Thanks again. Given I will continue to be earning there is no rush/benefit in me opening up a SIPP before this tax YE I dont think ?

This should give me time to investigate AVCs.

However its important I do one before tax YE for my wife though she will probbaly not give up work till Sep. I was therefore going to put the full 6K in this year to max it out against what she has earned 15/16. I was then going to set up a DD to put in another £200/month from the start of the next i.e. £2400. I will then ensure I top it up at the end to max out her contribution taking into account whatever she earns/the max for a non payer/low earner next year ?

Jerry

robin61

Yes it makes sense for you to get as much as you can into your wife's SIPP. So you would need to be quick now to get it in by the end of this tax year. If she isn' t giving up work until September she will have 6 months earnings in 16/17 so for example if she earns £8k per annum I.e £4k in 6 months you could put as much as £4k gross into the SIPP in 2016/17. Then from 2017/18 as a nil earner you can put in £2880 net / £3600 gross in every year for her which is money for nothing if her income is below the £11k allowance.

As you say for yourself less urgency so best make sure you choose the right option.

jerrysimon

If I was to go down the AVC route could I pull out the value in say 18 months and leave my pension for another 12 months to reduce the reduction for taking early or would the AVC and pension have to be taken at the same time ?

Jerry

robin61

jerrysimon wrote: »

If I was to go down the AVC route could I pull out the value in say 18 months and leave my pension for another 12 months to reduce the reduction for taking early or would the AVC and pension have to be taken at the same time ?

Jerry

You' ll need to get the information on what the rules are from your pension scheme to be sure but I know with the scheme I am in there is an option to transfer the whole AVC fund to another pension scheme before I take the main pension. No guarantee that yours is the same though so best check to make sure. So if yours is the same you could then transfer it to a SIPP at that stage and drawdown as necessary. Makes sense if your AVC scheme means you get the NI relief.

jerrysimon

Ok thanks again to all for your replies

I will update the post once I find out.

Jerry

OldBeanz

if it is a Civil Service AVC then you can transfer it out any time you want. There are no links to a CS pension and it can be transferred and drawn like any other pension without penalty or loss. The only bugbear is that to do it you will have to let it sit in someone's in-tray for a couple of months although the pension providers can act v quickly.

jerrysimon

Ok I have done it!

My wife now has a private pension. I set it up with HL initially as cash putting in £6k and it says £1.5k will be added in about 6-10 weeks :j

It seemed like a big deal as I have never really had savings except for a short while between selling and buying my houses (we have moved 8 times) always putting all my money back into my house/mortgage.

Anyway as stated I will put in £200/month for her to try and max it out whilst she is working next FY.

Thanks you all for your help. Next week I will investigate AVCs :T

Jerry

kidmugsy

jerrysimon wrote: »

Ok I have done it!

My wife now has a private pension. I set it up with HL initially as cash putting in £6k and it says £1.5k will be added in about 6-10 weeks

By golly that was decisive.

robin61

Well done. Hopefully now you are doing this kind of thing it makes you feel like your last few years at work are a bit more worthwhile. I know it helps my mindset.

jamesd

jerrysimon wrote: »

I agree taking my pension early is a sacrifice i.e. would reduce it by about 3-4K/year if taken before 60. However each year I work extra will reduce that.

There are two different things:

1. Stopping work
2. Taking that pension.

You should not take that pension before normal retirement age but you can stop work now if you like, provided you can afford it. And you can help to afford it using the mortgage and the higher lump sum and income you get by waiting to take the pension later.