Voluntary redundancy and retirement

onlyroz

zagfles wrote: »

Yes. But you need to find out what those unused amounts are. Sounds like the works pension was a DB scheme so this is quite hard to work out, but you may have pension statements that tell you. What you need is the "pension input amounts" for the "pension input periods" - note that before last July pension input periods didn't have to be the tax year. There's also a transition to align the PIP with the tax year resulting in last tax year being split into two.

But unless he made big contributions, got a big payrise, or was on a high income it's likely he'll have loads of spare allowance to carry forwards.You'll get the £70k taxed at his marginal rate, a lot of it at 40%. How much depends on other earnings. Say you get £50k net.

You pay £50k into a SIPP and it'll be grossed up by basic rate to £62.5k. You can then claim the 40% tax relief in his tax return but it goes to him and not the SIPP. And it'll likely be after the end of the tax year, so he can't put it in the SIPP next year if he has no earnings. Well only £2880 net.

If you want the whole £70k gross in the SIPP, you need to put in £56k net. You can find the extra temporarily from savings etc till you get the tax back.

Thanks, all useful. From what you say it's likely that he'll have plenty of spare allowance to invest all the money that he gets beyond the tax free £30k. If he gets some tax relief back he might as well just keep it, and put it in an ISA or something, considering at he wants to start drawing from this £62k pension in a couple of years.

onlyroz

Well we've found a financial advisor who is hopefully going to come round on Monday to help us decide what to do. The decision over whether to apply for the voluntary redundancy has to be made by Friday 24th.

atush

zagfles wrote: »

Yes. But you need to find out what those unused amounts are. Sounds like the works pension was a DB scheme so this is quite hard to work out,

Yes, as I said in post 39. They need to find out how much of the allowance they used both this year ad the last 3.

With the help of the employer as I believe is a DB scheme.

atush

onlyroz wrote: »

Well we've found a financial advisor who is hopefully going to come round on Monday to help us decide what to do. The decision over whether to apply for the voluntary redundancy has to be made by Friday 24th.

why are you paying them money (or is this free?) until you find out the info you need re post 39/41?

onlyroz

atush wrote: »

why are you paying them money (or is this free?) until you find out the info you need re post 39/41?

The first consultation is free. And there isn't enough time to find out all the information because the deadline for applying for redundancy is in a week, and we have been told that it takes two weeks to get any info out of the pension company.

However as his salary is only £36k it seems unlikely that he will have used up so much of his £40k allowance in each of the last 3 years to not have enough spare to cover the £70k.

atush

He wont have 40K allowance per year, he will only have 36K. It is 40K OR YOUR INCOME whichever is the lower.

So apply but still ask the pension company for the info. When it comes then put more money into the pension up to the amount allowed.

You may be able to get the basics over the phone. unlike DC pensions, the allowance used is something like the increase in the pension over that tax year (x20 maybe? not sure).

but ask a DB expert like hyubh or jem? At least you could use it for an approximation.

xylophone

He wont have 40K allowance per year, he will only have 36K. It is 40K OR YOUR INCOME whichever is the lower.

The OP's husband expects to receive a £100,000 redundancy payment in this tax year.

See Post 33.

And it appears that he has unused allowance from previous years to carry forward.

atush

but the previous years are 36K? So they will only be able to get the extra allowance on that income?

xylophone

http://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/carry-forward

onlyroz

Well despite what we were told last week, it seems like his department will not be eligible for voluntary redundancy


However, I think that we want to consider him going part time once he turns 55 - but I need to investigate how that will affect his pension.