5 Year Plan until Retirement

Triumph13

A few more key questions:

1. Is 60 the standard retirement date for your pension or will it be reduced by taking it early? If the latter then it may well be worth building up funds in a SIPP / PP then living on those for the first few years whilst deferring your DB to avoid the reduction.
2. Do you have any Lifetime Allowance issues?
3. Will you be a 40% taxpayer once your DB is in payment? Or when you have DB + SP? If so then the desirability of using a SIPP if NOT deferring your DB is greatly reduced (but still worth having). If you will be a basic rate taxpayer though with no LTA issues, bung everything you can that gets 40% relief into your pension. £60 net contribution => £100 gross => £85 after tax.
4. Does your DB scheme allow the 25% lump sum to be taken from AVCs but based on combined value? If so then the profit is even bigger as £60 becomes £100 tax free.

kidmugsy

hall2056 wrote: »

wife will have a small DC pension when she retires in 2022.

Why is it small? Build it up so that at least she uses her full Personal Allowance in retirement.

hall2056 wrote: »

I am a 40% taxpayer I have £40k saved to date in S&S ISA.

Odd combination. You're 55 so there is little advantage I can see in an ISA over a SIPP which will let you escape 40% income tax.

kidmugsy

BLB53 wrote: »

Even more reason to consider a sipp.


The OP may retire in 5 yrs time but the investment could continue for the next 30 yrs. It may have built up to ~£200,000 and the OP can then look at options such as the 25% tax free lump sum and withdraw income of say £6,000 from the remaining sum indefinitely.

Certainly worth consideration in my humble opinion.

He'd be paying 40% tax on that money in retirement once his State Pension has begun. True he'd get 25% tax-free, but otherwise the main advantage of a supersize SIPP would be that eventually he could bequeath it to wife, children, grandchildren, which may not interest him much.

The art is to use a SIPP to bridge the gap from age 60 to state pension age. Any SIPP beyond the amount necessary to do that is a bit of a luxury. Nothing wrong with luxury, of course. But he might be better off directing surplus funds to a SIPP for his wife, once he's avoided higher rate tax for himself.

maximumgardener

you are 40% taxpayer in employment &
if you plan to be 20% taxpayer when retired
you can have a mix of personal pension either in your name or your wife 's and also S&S isa's can be
invested in same as your pensions (also for you and your wife)
. you pay tax on your pensions on "the way out" (in payment) once personal allowance used up
but no tax due on your ISA's. happy days.

atush

Quote:
I am a 40% taxpayer

This means every 100 into a Sipp or DC pension will only cost you 60. Which builds in quite a bit of wiggle room should markets go down.

I'd be inclined to start one this tax year for sure.

hall2056

Triumph13 wrote: »

A few more key questions:

1. Is 60 the standard retirement date for your pension or will it be reduced by taking it early? If the latter then it may well be worth building up funds in a SIPP / PP then living on those for the first few years whilst deferring your DB to avoid the reduction. Yes 60 is standard, but not sure how this works if exceed 40/60th of DB, i.e. - work an extra year 41/60th?
2. Do you have any Lifetime Allowance issues? No
3. Will you be a 40% taxpayer once your DB is in payment? NoOr when you have DB + SP? I don't think soIf so then the desirability of using a SIPP if NOT deferring your DB is greatly reduced (but still worth having). If you will be a basic rate taxpayer though with no LTA issues, bung everything you can that gets 40% relief into your pension. £60 net contribution => £100 gross => £85 after tax.
4. Does your DB scheme allow the 25% lump sum to be taken from AVCs but based on combined value? Not sure will have to check If so then the profit is even bigger as £60 becomes £100 tax free.

This post has made my mind up that I should also make an appointment to see an IFA

mateyboy

AVC's all the way it's a no brainer 40% tax relief and
tax free at the end of 5 years, put the maximum in each year
and towards the end of the tax year see if there is scope to put in
more.