Pension Advice

Theark

Thanks for all the responses so far I think I've pretty much made up my mind that doing a CETV is not a good idea.

What if I took my pension now and reinvested the monthly payments into another form of investment would I get a better return or performance than leaving in the pot for another 4 years

GunJack

Theark wrote: »

Thanks for all the responses so far I think I've pretty much made up my mind that doing a CETV is not a good idea.

What if I took my pension now and reinvested the monthly payments into another form of investment would I get a better return or performance than leaving in the pot for another 4 years

You'd need to ask the BT pension administrator for the value to take now and the expected value in 4 yrs to be able to answer that - but I suspect there would be an actuarial reduction for taking it early before the scheme's normal retirement age..

Theark

Should have all the figures required by the end of the week, once I have these I can make a better informed decision

dunstonh

What if I took my pension now and reinvested the monthly payments into another form of investment would I get a better return or performance than leaving in the pot for another 4 years

Issues with that are:
1 - you could suffer a penalty for early commencement
2 - the tax wrapper that could be the best for you may well be pension. So, you could end up taking it out of the pension and paying a penalty (for life as its a reduction in the income for life) only to put it back into a pension.

Remember you do not have a pot. You have a defined benefit scheme. The benefits are what you have.

coyrls

dunstonh wrote: »

But the low income you suggest your father is on would hint that he made very minimal savings for retirement and effectively fell in the gap where he didnt do enough but did too much. Something that wont impact on you the same way

But the original statement was that his income was reduced because "he was taxed so heavily", I can't see that somebody with very minimal savings for retirement would be heavily taxed.

jamesd

Theark wrote: »

What if I took my pension now and reinvested the monthly payments into another form of investment would I get a better return or performance than leaving in the pot for another 4 years

Unlikely but worth seeing what the numbers are.

Taking it early is really only likely to make sense if you either plan to spend it or have some reason to want to accumulate a large pot of investments. Then the cost is delivering you some benefit and it's fine to decide that the benefit you're getting is worth the cost.

Depending on the numbers there's also a chance that it might be better to take no initial lump sum and take the income early to accumulate the lump sum, if a lump sum is wanted.

dunstonh

coyrls wrote: »

But the original statement was that his income was reduced because "he was taxed so heavily", I can't see that somebody with very minimal savings for retirement would be heavily taxed.

Good point.

Heavy taxation would apply to someone earning over £43k a year. It is unlikely someone on benefits would come close to that level of income and it doesnt sound like he is near £43k

The father is on a low income. So, taxation would be a low as well. That doesnt fit with the high taxation comment. So, it could be that the father has ranted a bit and the daughter has picked up the rant but the whole thing is actually based on any facts.

The other possibility is that the father gets a high state pension. One that is quite a bit more than the personal allowance. So, the tax he owes on the state pension is collected via the personal pension.

ThinkingOutLoud_2

dunstonh wrote: »

Good point. ...
The father is on a low income. So, taxation would be a low as well. That doesnt fit with the high taxation comment. ....

i think the income is the key - he crosses the margins and I am guessing from various comments throughout the thread > I think the objection is that he is paying tax at all when a) perhaps they were not aware that pensions were seen and income and so can see tax deducted and b) I think there is someone who lives near who gets higher state benefits (or did per the old scheme), saved nothing and does not pay tax.

So it is the sense of unfairness he is railing about, which if as she says he saved even something, must feel wrong. But as James says may not prevail under the new benefits approach

coyrls

Theark wrote: »

OK I know my father's next door neighbour only has his state pension, but he gets lots of top ups, his council tax is supplemented as is rent and various other things, he has far more disposable than some one who has worked all their life and saved for their retirement. And I have seen this pattern a lot

You must know him very well if he has disclosed his work and pension history, his savings history, all his sources of income, his benefits and what his disposable income is.

LHW99

Does your father live alone, and if so has he claimed the single person's reduction on his council tax?
(apologies if this is answered, I did look but didn't spot it)