Take it or not?

jonsdad

In the position to take my pension at 58,will,give me enough to pay off mortgage and a small pension.currently in receipt of carers allowance and tax credits.and work part time up to carers threshold.what to do?

worried_jim

jonsdad wrote: »

In the position to take my pension at 58,will,give me enough to pay off mortgage and a small pension.currently in receipt of carers allowance and tax credits.and work part time up to carers threshold.what to do?

Sit down and do your sums, take your time and don't be afraid to ask for advice.

jonsdad

worried_jim wrote: »

Sit down and do your sums, take your time and don't be afraid to ask for advice.

I’ve done the sums,totalled wages,carers allowance,tax credits,so as I see it by taking the pension I would lose the tax credits but gain the pension and the monthly amount I pay for the mortgage which has 15 yrs to run...so assuming I keep my job and continue to receive the carers allowance with my pension and no mortgage I would be approx 5k better off...though I would have to pay some tax,it just seems too easy...I must’ve got something wrong knowing my luck...

DairyQueen

Note that you could also have a second bite of the pension's cherry. You are able to continue contributing to a pension scheme up to your earnings, or £3600, whichever is the greater. Also, the amount you are able to earn before hitting your eligibility for carers allowance is net of 50% of any pension contributions.

You could therefore open a SIPP, and pay up to the above limit (net of 20% tax) into this. Wait for the government to add the 20% in tax relief and then withdraw the cash. The first 25% of the withdrawal would be tax free and the rest subject to income tax if your taxable income (job plus pension) is under the personal allowance.. It's a good way of using any unused tax allowance.

Just a thought.

jonsdad

I can’t add anymore to the pension I am talking about because i no longer work for Royal Mail,it is this old final salary scheme,believe me if I could I would put everything into it lol...

DairyQueen

Not your DB pension but a new plan. You can begin another plan (a SIPP) and shove the dosh into that. This is simply a device to gain the tax benefit on pension contributions and use your personal allowance as tax efficiently as possible. You can have as many pension plans as you like.

DairyQueen

Take a look at this thread:
https://forums.moneysavingexpert.com/showthread.php?t=5580163&highlight=paying+sipp+in+retirement

There are many others.

jonsdad

So you reckon I could take my pension,pay off my mortgage and receive the remaining pension,my carers allowance and wages which would be approx £13600...I reckon I would lose the tax credits so that previous figure might attract some tax...so if I understand it correctly...if enough money left from lump sum after paying off mortgage,I could invest this taking my earnings as £5824,(assuming dont count carers all,or new pension)being higher than£3600...in a sipp?sorry Im asking a lot of questions

DairyQueen

My turn to ask a few questions and also to check if I have your info correct, I'm not being nosy but these things are material to providing you with the right information:

You receive Carers Allowance of 64.60 pw x 52 = 3359.20 per year?
How much do you earn before tax per year?
How much is your annual RM pension before tax? Is this the age 60 benefit? Will you receive more benefits from the RM scheme (age 65 benefits?) or from any other pension (other than the state pension) in the future?
You intend paying off your mortgage from your pension tax free commencement lump sum?
You will have capital left after paying the mortgage from the tax free cash? If so, approximately how much?
How old are you?
At what age do you receive the state pension?
Have you received a state pension forecast? If so, how much is it forecast to be?
How much income do you need per year?
Your personal tax allowance is £11850 this year?

jonsdad

I hope this is enough
PArt 1 of 2
Carers allowance correct
Current salary £5824 will have to do two hours less in September because rate is going up,but still be below carers limit
Don!!!8217;t pay tax
Rm pension is for 2 yrs early
Pension of £4433.56 lump sum £29557.06
Nothing more to come if taken now
Not sure of exact amount left over but possibly £1-2000

jonsdad

Part 2 of 2
58 yrs old
Hmrc is a bit confusing....it says tax free amount can earn is £8502...they!!!8217;ve estimated my income at £11910 of which they say the first£11910 is tax free?so contradictory to me anyway...lol...I don!!!8217;t pay tax anyway so think the figure you quoted is correct plus maybe £60 for clothing ?
Can retire on 12 jan 2027 on pension of £164.35 which they say is the most I can get.
Sorry if I appear vague but it!!!8217;s pretty accurate....