Unlikely to get close to qualifying for pension, best options?

Lungboy

Small update, the Prudential AVC offered at work is taken pre-NI as well as pre-tax as a salary sacrifice, which makes it very attractive. It's just a shame the Prudential options for investing seem so limited.

jamesd

Worth asking whether you can transfer out from time to time to improve that. My work arranged that possibility after I asked.

Lungboy

I've not seen that option mentioned anywhere but I can ask.

Lungboy

Lungboy wrote: »

No reply from the FPC yet. I still can't decide what's best to do for the future. Lisa vs S&s isa vs avc vs PPP vs SIPP is too many conflicting pros and cons.

The FPC finally got back to me about my current SP figure. It's a total non-answer to my question:

"Thank you for your email dated 27 March 2017.

Under the new State Pension rules, to get paid any new State Pension an individual must have a minimum of 10 qualifying years on their NI contribution record by the time they reach State Pension age. This is called the minimum qualifying period. If you do not satisfy the minimum qualifying period rule when you reach State Pension age you will not normally be paid a State Pension."

Thanks for that.

atush

Lungboy wrote: »

I was worried that would spread myself too thin so as to be pointless. I could do £50 a month into s&s and £50 a month into either avc or LiSA. Would that be a reasonable solution?

50 here and 50 there are the same as 100 in one place- IF they are invested in similar ways.

The splitting gives you options as to when you can spend the money.

I really feel you need to look into what benefits you might be in line for is you did retire early due to ill health. AS many of these come with Nics attached.

I agree with t hose above who say look into paying for the part years to become full years if possible

Lungboy

It's been almost a year and I still haven't made a decision on this aa finances have been too tight. Change is on the horizon though so I want to weigh up my options again.

Current thinking: LISA is a non starter sadly. Although online calculators suggest it might give best returns, the fact it locks my money away unless I take a potentially hefty penalty right when I will need money the most is too big a negative. It's a shame that you can access the money if terminal but not if retired early on ill health.

This leaves SIPP vs ISA. Tax relief on the SIPP is very attractive, as is the fact it wouldn't count in possible benefit calculations where the ISA would. It's accessible at 55 too which is better than the LISA, but I'm struggling to find info on SIPPs being taken pre 55 due to ill health. Can they be? Does it vary between SIPP providers?

LHW99

The chap also said that one of the main benefits of this avc is that you could collect it but not your LGPS pension allowing the LGPS to accrue more years before taking it to prevent any dip in income

One aspect of this - If you were given ill-health retirement, say at 50, from the main LGPS scheme, where would the AVC fit in?
Can you then take it before the normal 'early' age of 55, or not?

Lungboy

I think I've ruled the AVC out. I was incorrectly told that it was salary sacrifice so saving NICs but it's not. Also, i'd prefer more flexibility in where to invest than is offered by the AVC.

LHW99

AFAIK SIPPs are caught by the 55 age limit rule, but someone more qualified may be able to confirm or otherwise.
Although standard ISA's don't get the tax relief you get in a pension (or LISA bonus) they are tax-free when you take the money out. And if your health ends up better than you are expecting now, you could always transfer money across to get tax relief at a later date.

Lungboy

My main worry is that if I did need to retire early due to ill health, the ISA would be used as capital in assessing means tested benefits whereas in the SIPP it wouldn't. However, the access to the ISA might be very handy at short notice if things did go wrong with my health. Maybe a 50/50 ISA/SIPP split is the way to go, a bit more cautious in the ISA and a bit more bullish in the SIPP perhaps.