Yet Another "Now or Later?" Thread!

westv

Me: 55
Wife: 48

Current pot £305,000
savings £84000

Me: Current salary £44k
DB @ 60 £4334 index linked until in payment

Her: DB1 @ 60 £8,700 (£30k lump sum) index linked down to around £5,500 (£19K LS) @ 50.
DB 2 roughly £4,500 @ 67 index linked.
Plans to carry on working. Current gross income £26k annual
Plan to reduce to 3 days a week from 2020.

Mortgage fixed rate until Sept 2020 when o/s balance will be £77k
Plan to keep back around £30k for moving house maybe 2021/22

Our current monthly outgoings
Mortgage £580
My London costs £1,050
My pension contribution 9% (employer 19%)

net income is around £2,300 a month net
As far as I can see this level of income is achievable if I retired right now.

kidmugsy

Looks OK to me. I'd start by working out what you will be getting once your DB pension is in payment, her DB1, and two SRPs. Does that look to be enough? In which case what is the best way to fill the gaps, and what is the best way to look after the survivor after first death?

(i) Is DB2 a pension your wife is currently contributing to?
(ii) If not would it be worth asking for a CETV? Otherwise it's going to give you both an income boost when you will need it least because your State Retirement Pensions will have begun.
(iii) How are you both for predicted SRPs?
(iv) Should your wife be contributing to a DC pension while she still has the ability to base her contribution on earnings?

westv

Oh yes! I forgot SP. Both currently £8,300 at 67.
Also forgot that My DB and her DB1 are 50% survivor.
DB2 is 30% I think.
Hers are CS 1 = Classic and 2 = Alpha

kidmugsy

And another thing: what's your own current income net of income tax, NICs, and pension contribution? Do you plan to match that by income drawdown from your pension pot? Or do you plan to draw, say, your personal allowance (for 19/20 onwards) and make up the rest of your expenditure by using either non-tax-sheltered savings or tax-free lump sum from your pension pot?

How do you plan to safeguard your pot? Is it a Personal Pension or a SIPP?

What about the investments within it: return-seeking (equities) or risk-mitigating (bonds, cash, ....)?

kidmugsy

westv wrote: »

Oh yes! I forgot SP. Both currently £8,300 at 67.
Also forgot that My DB and her DB1 are 50% survivor.
DB2 is 30% I think.
Hers are CS 1 = Classic and 2 = Alpha

Ah well, no pension transfers for her. How much would she lose on DB2 if she took it at the same time as DB1?

Are you certain about the size of the SRPs? Those are your official forecasts are they?

Suppose your wife chooses to retire at 60: "Her: DB1 @ 60 £8,700 (£30k lump sum)". She could have three or four thousand a year of unused Personal Allowance against income tax. That gives her quite an incentive to contribute to a personal pension of some sort now so that she will be able to draw out not only tax-free lump sum but also taxable income that will actually be untaxed. Remember that she'll get a "tax rebate" even on the part of her contribution that comes from the part of her income that paid no income tax.

The only complication is that she'll need to find out how much of her potential personal pension contribution is ruled out by virtue of the increase in value of her DB pension over the relevant tax year.

westv

kidmugsy wrote: »

And another thing: what's your own current income net of income tax, NICs, and pension contribution? Do you plan to match that by income drawdown from your pension pot? Or do you plan to draw, say, your personal allowance (for 19/20 onwards) and make up the rest of your expenditure by using either non-tax-sheltered savings or tax-free lump sum from your pension pot?

How do you plan to safeguard your pot? Is it a Personal Pension or a SIPP?

What about the investments within it: return-seeking (equities) or risk-mitigating (bonds, cash, ....)?

My current net is around £2,500 but I also pay around £1k a month working in London during the week so I'd only need to match £1,500. My wife's net is £1,500 - so total net £1,500 which would mean I'd need to match £1k when she is full time but more if/when she goes part time.
Pension is part SIPP and part company pension with Aegon.

westv

Plugging the figures into Cfiresim seemed to indicate figures between £2,300 and £2,500 in total a month from me and my wife. That's with 90% success, just using the default "increase with inflation" spending selection and fees amended to 1.5%.
There didn't seem to be a great amount of variation for ages 55, 56 or 57.

It's a pity the company share save we had (2 free for every one purchased) is no longer running. The company I work for was taken over last year.

kidmugsy

westv wrote: »

Pension is part SIPP and part company pension with Aegon.

dunstonh, who knows a thing or two, recently explained that personal pensions and stakeholder pensions have complete protection from fraud and so forth whereas each SIPP has protection only up to £50k. I plan to draw this to the attention of The Young in my extended family.

I expect the Aegon pension is the sort of insurance company pension that gets the 100% protection. You could always ask the Great Man. Or even check it on your scheme's website.