Take part Pension & Increase other pension and AVC

LULULU1

I am a 53 year old employed by Royal Mail for the past 28 years. I earn approx. 40k per year and have £120k outstanding mortgage and 25k loans. Really struggling with current role.

I have a pension I am due to take at 60 and another one at 65. Both of these can be taken from 55 onwards. I also currently pay £500 per month into an AVC and have £40k saved in here.

I want to semi retire at 55 and take my pension I am due to take at 60 but not the one I am due to get at 65. I will use the lump sum of 60k to pay part of my mortgage and the 8k pension will allow me to do a couple of days less per week.

To avoid paying extra tax on my pay and pension when I semi retire, can I increase my AVC or can I pay extra into my 65 pension.

Many thanks for any help.

xylophone

I want to semi retire at 55 and take my pension I am due to take at 60 but not the one I am due to get at 65. I will use the lump sum of 60k to pay part of my mortgage and the 8k pension will allow me to do a couple of days less per week.

To avoid paying extra tax on my pay and pension when I semi retire, can I increase my AVC or can I pay extra into my 65 pension.

Have you checked with the Royal Mail pension scheme that you can take your pension on the terms you outline?

With regard to pension tax relief, subject to the annual allowance/lifetime allowance you can contribute to a pension as much as you earn and receive tax relief up to the age of 75.

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

If contributions to an employer's scheme are not permitted, opening a personal pension could be the way to go.

LULULU1

Many thanks for your reply. Yes I can definitely take pension at 55. I haven't checked if I can take one and leave the other. I just assumed (possibly wrongly) that I could.

If I do have to take both pensions at 55 can I continue with my AVC.

xylophone

can I continue with my AVC.

Check with the provider.

dasherman

You can’t pay any extra into your NRA65 pension because the employee contribution rate is fixed at 6%. But you can pay extra into your AVC if you want to, or alternatively you could pay into an external pension arrangement instead i.e personal pension, SIPP, etc.

There is nothing stopping you from taking your NRA60 pension and still keep paying into the NRA65. As far as I know you can’t take both and still pay AVC’s but I should check with the pensions service centre in Chesterfield.

You also need to bear in mind that Royal Mail are expected to announce the closure of the existing final/career average pension scheme in the relatively near future. With the likely date of closure being March 2018. I’m sure the CWU will try and argue against it but realistically it will be replaced with a DC scheme from that date onwards.