Pensions - new rules?

paulfoel

At what age can I take cash out? Is it tax free?

Is there somewhere I can see an easy to follow guide?

Whats a decent pension pot these days? Mine is about £100K at the moment - late 40s. Not good?

PensionTech

At what age can I take cash out?

At 55 - though if you have a final salary scheme, you may not be able to take any benefits until the scheme's Normal Retirement Age - normally 65 or 60 - and then it won't just be cash you'll be taking, it'll be a regular pension as well.

Is it tax free?

25% of it is tax-free, the rest is taxed, and the form in which you take the 75% (regular pension, one-off cash sums, series of smaller cash sums of variable amounts) depends on the type of scheme you have and what choices you make.

Whats a decent pension pot these days? Mine is about £100K at the moment - late 40s. Not good?

Could be worse but if you can save more into it now, do so. £100k is probably about £4-5k per year throughout retirement (though less if you're starting from age 55). That, plus the state pension which won't kick in until age 66-67 for you, will not be very much to live on. But of course, how much you need in retirement depends on your circumstances. You need to think about things like: when are you planning to retire? Do you have any other savings? What about a mortgage? Are you married/in a long-term relationship? If so, does your partner have a pension? Any dependent children? What part of the country do you live in? Any serious hereditary diseases that mean you're likely to die earlier than the average person? etc.

Pensions aren't special. They are just a form of savings. You want to stop working at some age, so you need to work out what amount of savings you think will last you for the rest of your life. The pertinent questions then are a) what age, b) how long do you expect to live (and please consider this with reference to contemporary statistics for a person your age, rather than your family - e.g. just because your granddad died at, say, 70 doesn't mean you will, as medicine, occupational health standards, etc. have moved on hugely since his lifetime), and c) how much you think you'll spend each year.

dunstonh

Pensions - new rules?

There are no new rules affecting access dates. Still 55+

Whats a decent pension pot these days? Mine is about £100K at the moment - late 40s. Not good?

Behind what you would like but not at a level you cannot recover assuming you are looking for it to provide a relatively lowish amount (but possibly enough if you are retiring at state pension age and adding to it monthly at a suitable level).

Someone with a pot your size up north or in east anglia will get more spending power with it than someone London or home counties. Someone with a consumer lifestyle needs more than someone who is frugal. So, these things are very personal.

paulfoel

Its all in a SIPP not a works pension. I live in Wales so its a bit better.

So can you take 25% at any time after 55?

Alas, my mortgage runs until I'm 64 so I guess this is where I need to be looking at.

Wife has got an NHS pension. Probably be 30 year service by then as well.

atush

Do a search for the thread entitled, The Number.

This is the amount of income you feel you will need in retirment. Then you work backwards to find out how big your pot needs to be. Bearing in mind annuities currently pay around 5% flat rate, and around 3% increasing each year on 100K.

Your pot is above the current average so that i good, but bare in mind the average is pulled down by those who never paind into a pension so have 0.

Have you kept your payments the same, or do you tale the prudent course of increasing them annually, or with each pay increase?

paulfoel

atush wrote: »

Do a search for the thread entitled, The Number.

This is the amount of income you feel you will need in retirment. Then you work backwards to find out how big your pot needs to be. Bearing in mind annuities currently pay around 5% flat rate, and around 3% increasing each year on 100K.

Your pot is above the current average so that i good, but bare in mind the average is pulled down by those who never paind into a pension so have 0.

Have you kept your payments the same, or do you tale the prudent course of increasing them annually, or with each pay increase?

Surprised at that. Whats the average then? I guess like you say there are those who put zero.

I must admit I am tempted not to overdo it because those who dont bother will get pension credit whilst I'll get no pension credit!

Its complicated. Number of pensions lumped in from perm salary days. Ive got my own ltd company now and havent put much in last few years. I've got to start doing again.

HappyMJ

paulfoel wrote: »

Surprised at that. Whats the average then? I guess like you say there are those who put zero.

I must admit I am tempted not to overdo it because those who dont bother will get pension credit whilst I'll get no pension credit!

Its complicated. Number of pensions lumped in from perm salary days. Ive got my own ltd company now and havent put much in last few years. I've got to start doing again.

Pension credit is the gateway to many other means tested benefits so that's what I'm planning on.

I do though like you have several pensions from my PAYE days. I doubt they add up to much more than £10,000 in total. I'll just cash them out in full when I'm allowed access.

Then again I'm 41 and haven't worked for the last 6 years having retired from full time work at 35. I do the odd bits and pieces through my limited company but the current contract rates are so low it's just not worth doing on a full time basis. My expenses would equal my earnings and defeat the point.

My pension is my house and my cash savings. I earn something like £18,000 per year from part time work paying a low directors salary and dividends, rental income and interest and pay no income tax or national insurance at all.

xylophone

pay no income tax or national insurance at all.

But are you receiving NI credits because you are using your own limited company as you describe here in a suggestion to another poster?

http://forums.moneysavingexpert.com/showthread.php?p=70547545#post70547545

If so, presumably you will reach the full amount of the new state pension by the time you are eligible to draw it so should be receiving an income above PC level?

mgdavid

HappyMJ wrote: »

Pension credit is the gateway to many other means tested benefits so that's what I'm planning on.

................

I may be wrong, but i thought the whole point of nSP being c. £155 a week is that it's pitched at a level that will do away with Pension Credit completely.
As has been said on here by many wiser than me, anyone who plans to depend on benefits in retirement is ..... extremely unwise / stupid / daft / living in cloud cuckoo land / in for a bit of a shock (delete according to mood).

atush

Correct, there will be no pension credit.

As far as I know, the average pension pot is around 30K. But this includes all those w/o any pot at all, and tiny pots too.

But 100K will not a comfortable pension make, unless you have S&S isas and other investments too.

Thrugelmir

paulfoel wrote: »

Whats a decent pension pot these days? Mine is about £100K at the moment - late 40s. Not good?

Investment returns are primarily built on reinvesting the income and thereby benefiting from compounding. As your fund grows larger. Then the speed of growth will accelerate. No need to become disheartened. The latter years are the most rewarding.