I need top tax tips for retirement planning

sweetmelody

I have picked up so many gems of advice through my perusing of this board, but never come across anything that pulls together tax advice for retirement in one place. Are you prepared to share your gems in relation to when and how to plan drawdown, planning if you are a married couple, taking your 25% tax free lump sum etc etc? Its a broad topic so to focus things in relation to my own situation (well, I did ask the question!):


46 years of age (me - employed), 50 years (husband - director of own company)
£5,600 pa deferred DB pension 1 from 60 (me)
£4,800 pa deferred DB pension 2 from 60 (me)
£7,900 pa deferred DB pension 3 from 65 (me)
c £10,000 pa rental income (joint)
£100,000 in DC pension (me)
£8,297 pa state pension from 67 (both myself and husband)

£70,000 in cash ISAs (husband), newly-opened SIPP with a plan to make £40,000 pa employer contributions to catch up on his pension saving. Could transfer the £70k ISA balances and make up to £120k to use his carry forward allowances.

I'm leaving my current job and DB scheme tomorrow. No DB scheme offered by new employer (DC scheme which has a 10% employer contribution - non contributory), so my plan between now and retirement is to save as much as possible in its DC scheme and in ISAs to bringing my retirement date forward from 60 (would love to achieve FI by 55). My husband has no date in mind, he will just step back from the business over time by buying in more help as he needs it.

When we are both fully retired, we have a loose joint pension target of £40,000 and want to minimise the tax payable on that. Is that possible when most of the pension income is currently in my name (i.e. cannot be split between myself and husband)?

Brynsam

Maybe the best 'tip' of all is to get some professional (i.e. paid for) advice, based on a full understanding of both you and your husband's situation (attitude to risk, health, family commitments if any, spending patterns etc). Could be the best investment you've ever made.

AlanP_2

You need to get OHs pension "income" up to tax allowance level at least to start balancing things out.

What about State Pension situation?

If you want £40k pa in retirement then, even if that is after tax, if he is at least using his allowance up you will both be BR taxpayers. You can adjust how much you take out of the DC pots so that you keep below HR threshold.

planteria

AlanP wrote: »

What about State Pension situation?

sweetmelody has mentioned State Pension for them both.

some useful pensions already in place for yourself. and good that your husband has a business which is able to contribute £40k/y as that will quickly build a useful pot. i like the combination of DB pensions (which i wouldn't transfer out - whatever advice you are given), DC pensions and Property. some different sources of retirement income upon which to build.

sweetmelody

Thanks all


Being basic rate taxpayers is palatable. However, regarding the state pension situation, I think we might find ourselves in the position when we get to SPA of earning in excess of the BR limits - as well as being in excess of the £40k that we need.


I agree, Planteria, that transferring out shouldn't be a consideration (and I too think we will have a good mix of assets in the retirement portfolio, even if we do need to think more carefully about how it is split between the two of us). However, I wonder if I might achieve better income smoothing (as well as getting closer to retiring at 55) by taking my DB pensions earlier?

AlanP_2

planteria wrote: »

sweetmelody has mentioned State Pension for them both.

Thanks, I missed that.

AlanP_2

sweetmelody wrote: »

Thanks all


Being basic rate taxpayers is palatable. However, regarding the state pension situation, I think we might find ourselves in the position when we get to SPA of earning in excess of the BR limits - as well as being in excess of the £40k that we need.


I agree, Planteria, that transferring out shouldn't be a consideration (and I too think we will have a good mix of assets in the retirement portfolio, even if we do need to think more carefully about how it is split between the two of us). However, I wonder if I might achieve better income smoothing (as well as getting closer to retiring at 55) by taking my DB pensions earlier?

You don't have to withdraw from the DC pots if you don't need the income so could probably keep it all at BR tax level and still take more than 40k if required. The better the balance the easier this will be as you have started to consider.

What are the reductions on the DB schemes for taking them earlier? Also, any additional benefit if you delay taking them?

Scheme Rules and Excel time by the sounds of it.