Does giving up guaranteed income ever make sense?

sunnyjim1234

xylophone wrote: »

As above - has your wife obtained a state pension forecast?

https://www.gov.uk/check-state-pension

Thank you xylophone and also dazed and confused.
Just checked my wife's NI record and she has 31 years of full contributions and has 20 years to make up another 4
Many Thanks

sunnyjim1234

sunnyjim1234 wrote: »

Thank you very much, I think that answers my question.

Thanks to everyone for your input, it doesn't look like option 2 is viable.
Any thoughts on option 1?
Drawing excess income from my SIPP to add to my wife's fund in order to take advantage of her personal allowance later on.
I appreciate that this would likely mean my withdrawal rate would be too high as far as SWR goes, but as it is being reinvested, albeit in my wife's name is this okay?

xylophone

Could you not gift your wife £2800 per annum from your ISA funds?

She could then open a SIPP, get the tax relief and access if required after her 55th birthday ( though this may change in the future).

sunnyjim1234

xylophone wrote: »

Could you not gift your wife £2800 per annum from your ISA funds?

She could then open a SIPP, get the tax relief and access if required after her 55th birthday ( though this may change in the future).

That is what I am doing at the moment, but it occurred to me that when I reach 67, SP and the Pru annuity would use up most if not all of my personal allowance, meaning that all my SIPP income drawdown would be taxable. If however I was to gradually move some funds over into my wife's pension then her income drawdown would more than likely fall within her personal allowance, particularly between 57 and 67. Allowing me to reduce my taxable drawdown.
Does that make sense?

Dazed_and_confused

Just checked my wife's NI record and she has 31 years of full contributions and has 20 years to make up another 4

So by coincidence she happens to need 35 years?

Or have you just looked at her contribution record and not her actual State Pension forecast (and current entitlement)?

sunnyjim1234

Dazed_and_confused wrote: »

So by coincidence she happens to need 35 years?

Or have you just looked at her contribution record and not her actual State Pension forecast (and current entitlement)?

Good point, just checked her pension forecast and it appears that she needs 35 years and is 4 years short.

"Estimate based on your National Insurance record up to 5 April 2018
£150.09 a week
"Forecast if you contribute another 4 years before 5 April 2038
£168.60

£168.60 is the most you can get.

Dazed_and_confused

Good point, just checked her pension forecast and it appears that she needs 35 years and is 4 years short

You are getting confused somewhere along the line.

Based on the figures in your previous post she does need 4 years to get to £168.60. The first 3 years will each get her an additional £4.81/week and the final year will add £4.08.

£150.09 + £4.81 + £4.81 + £4.81 + £4.08 = £168.60

"Estimate based on your National Insurance record up to 5 April 2018
£150.09 a week
"Forecast if you contribute another 4 years before 5 April 2038
£168.60

£168.60 is the most you can get.

But in your original post you said,

Wife 47, non earner only 30 yrs NI contributions

So it sounds like she only needs 34 years to get to the maximum. A perfect example of how the "35 years" doesn't apply to your wife as she is under the transitional rules.

MK62

sunnyjim1234 wrote: »

That is what I am doing at the moment, but it occurred to me that when I reach 67, SP and the Pru annuity would use up most if not all of my personal allowance, meaning that all my SIPP income drawdown would be taxable. If however I was to gradually move some funds over into my wife's pension then her income drawdown would more than likely fall within her personal allowance, particularly between 57 and 67. Allowing me to reduce my taxable drawdown.
Does that make sense?

It doesn't tbh......run the numbers and you'll find you'll be better off paying the £2880pa into your wife's SIPP from your ISAs.
If you couldn't do that though, then you'd be better off paying it from your pension rather than not paying it at all.

PS - I take it your wife is claiming Marriage Allowance (and so effectively transferring 10% of her PA to you)?

PPS - I also take it that you are paying £2880pa into your own SIPP too?

sunnyjim1234

Dazed_and_confused wrote: »

You are getting confused somewhere along the line.

Based on the figures in your previous post she does need 4 years to get to £168.60. The first 3 years will each get her an additional £4.81/week and the final year will add £4.08.

£150.09 + £4.81 + £4.81 + £4.81 + £4.08 = £168.60



But in your original post you said,



So it sounds like she only needs 34 years to get to the maximum. A perfect example of how the "35 years" doesn't apply to your wife as she is under the transitional rules.

You are right, I misunderstood her estimate, which was based on her contributions up to 2018, she will also be credited with contributions for the year to 2019 due to being in receipt of child benefit.
Many thanks

sunnyjim1234

MK62 wrote: »

It doesn't tbh......run the numbers and you'll find you'll be better off paying the £2880pa into your wife's SIPP from your ISAs.
If you couldn't do that though, then you'd be better off paying it from your pension rather than not paying it at all.

PS - I take it your wife is claiming Marriage Allowance (and so effectively transferring 10% of her PA to you)?

PPS - I also take it that you are paying £2880pa into your own SIPP too?

Yes, it effectively makes my personal allowance £13750
and yes I am making the £2880 pension contribution.
Thank you