It's time to start digging up those Squirrelled Nuts!!!!

cfw1994

Remaining solvent is Good™ 
On pensions.....it feels like anything and everything could be up for grabs, eh!   We live in the strangest of times.....
I've often felt the extra benefit to high rate tax payers felt....wrong (even as a beneficiary!), but making changes to that sort of thing would be massive - the number of salary sacrifice schemes that exist is huge, there are always unintended consequences of too much fiddling.

If you are concerned about losing access to the 25% tax free element of future drawdowns, you could always take it all up front (or perhaps spread your bets and take some!), but reinvest it.  Ideally into S&S ISAs, but I’m guessing you may have 20-21 allocation already full.   In which case, a general Investment account (& keep an eye on capital gains tax...).  Either way, in theory you can chose the same funds they were in within your pension.
I cannot imagine them doing anything dramatic to ISAs, but they will need to encourage spending perhaps more than saving, so who knows.   Can’t imagine that being retrospective.

Sea_Shell

cfw1994 said:

Remaining solvent is Good™ 
On pensions.....it feels like anything and everything could be up for grabs, eh!   We live in the strangest of times.....
I've often felt the extra benefit to high rate tax payers felt....wrong (even as a beneficiary!), but making changes to that sort of thing would be massive - the number of salary sacrifice schemes that exist is huge, there are always unintended consequences of too much fiddling.

If you are concerned about losing access to the 25% tax free element of future drawdowns, you could always take it all up front (or perhaps spread your bets and take some!), but reinvest it.  Ideally into S&S ISAs, but I’m guessing you may have 20-21 allocation already full.   In which case, a general Investment account (& keep an eye on capital gains tax...).  Either way, in theory you can chose the same funds they were in within your pension.
I cannot imagine them doing anything dramatic to ISAs, but they will need to encourage spending perhaps more than saving, so who knows.   Can’t imagine that being retrospective.

Yes, DH's plan is to take the full 25% up front and re-invest in straight into our ISA's.    He should then be able to pull the balance out up to his (plus a bit of my) PA over 10 years, before other (SP and DB) pensions kick in.

We have almost exactly one year to go until DH is 55, and we have £25,000 cash to last us!!

We have plenty of room on the broom in respect of 20/21 ISA's, but no need of it at the moment.    We might squirrel a bit of that £25k as we go through the next 12 months, depending on how our spending goes.   

DH's 25% won't be £40,000 so we can use 21/22 tax year for that.

He has a fixed term bond maturing at that time too, which is £60,000, which we'll split between ready cash and possibly Premium Bonds.   It's our "spend if the investments have tanked" fund!!!    We'll make a decision on that at the time.    A lot can happen in a year!!!!

LHW99

I suppose they could put NI on pension income as well as earned income (and remove the age limit, maybe exempting SP). That wouldn't be terrible terrible, as far as our plans go, but it would be a hit.

Preacher64

LHW99 said:

I suppose they could put NI on pension income as well as earned income (and remove the age limit, maybe exempting SP). That wouldn't be terrible terrible, as far as our plans go, but it would be a hit.

I’ve heard that mentioned before but, unless you had a salary sacrifice scheme, haven’t you already paid NI on your salary before any pension contributions? That would seem like paying it twice, severely impacting on any investment growth and likely to encourage more people to stop saving into pensions. 

I think the tax relief on contributions and salary sacrifice schemes would be more likely to be looked at first but there’s no real obvious answer.

LHW99

Preacher64 said:

LHW99 said:

I suppose they could put NI on pension income as well as earned income (and remove the age limit, maybe exempting SP). That wouldn't be terrible terrible, as far as our plans go, but it would be a hit.

I’ve heard that mentioned before but, unless you had a salary sacrifice scheme, haven’t you already paid NI on your salary before any pension contributions? That would seem like paying it twice, severely impacting on any investment growth and likely to encourage more people to stop saving into pensions. 

I think the tax relief on contributions and salary sacrifice schemes would be more likely to be looked at first but there’s no real obvious answer.

Personal contributions, yes, but certainly SS no. Removing the age limit though so that any part time (or full time) work over SPA iis subject to NI wouldn't equate to double taxation.

Audaxer

LHW99 said:

I suppose they could put NI on pension income as well as earned income (and remove the age limit, maybe exempting SP). That wouldn't be terrible terrible, as far as our plans go, but it would be a hit.

Hopefully that won't happen. I think it would be a pretty big hit for most pensioners if they had to start paying NI on their pension income at the same percentage rate that was paid on their previous salary income. It would certainly affect my DB pension in a big way.

RueyE

On the subject of 'Squirrelled Nuts' and a word of warning for anyone planning to retire, Mrs R and I have just had to use up a decent chunk of these as a result of no longer being able to act as a guarantor for our eldest on their rented accommodation whilst at university. As a result we have had to pay the full annual let amount up front, which came as a bit of a shock to the system. Luckily we had enough to cover it and our eldest will hopefully be able to repay about 40% of it in a couple of payments sometime later next year.
In effect the rental companies / landlords require you to have an annual income (earnings or pension) equivalent to 36 x the monthly rental costs to act as a guarantor.     
Also our youngest has finished university this year, with a decent degree in a STEM subject, but strangely enough can't find work in their chosen area of work with the current Covid situation impacting jobs. This again has made us rethink and replan our living costs for the next 18 months, but with most employers only offering non permanent positions, we can see another rental funding situation arising unless employment can be found within reasonable distance of home.  
Hope you don't fall into this unfortunate situation and this just makes you stop and think about a potential costing down the line.
Thanks

Sea_Shell

We don't have kids, and have no intention of being a guarantor to other family either.

So not a problem for us, thankfully.

DairyQueen

RueyE said:

On the subject of 'Squirrelled Nuts' and a word of warning for anyone planning to retire, Mrs R and I have just had to use up a decent chunk of these as a result of no longer being able to act as a guarantor for our eldest on their rented accommodation whilst at university. As a result we have had to pay the full annual let amount up front, which came as a bit of a shock to the system. Luckily we had enough to cover it and our eldest will hopefully be able to repay about 40% of it in a couple of payments sometime later next year.
In effect the rental companies / landlords require you to have an annual income (earnings or pension) equivalent to 36 x the monthly rental costs to act as a guarantor.     
Also our youngest has finished university this year, with a decent degree in a STEM subject, but strangely enough can't find work in their chosen area of work with the current Covid situation impacting jobs. This again has made us rethink and replan our living costs for the next 18 months, but with most employers only offering non permanent positions, we can see another rental funding situation arising unless employment can be found within reasonable distance of home.  
Hope you don't fall into this unfortunate situation and this just makes you stop and think about a potential costing down the line.
Thanks

Yep, something similar happened to us. The eldest wanted to study 2-years post-grad. It was worth the extortionate cost as she has been independent and career-successful ever since. The youngest got a job in London and she and now-husband needed help with a property deposit. London prices (ouch). Thankfully, that also worked-out for them and we had budgeted our contribution to their wedding so that wasn't an unexpected cost. 

Still licking our financial wounds we needed to help a family member with a crisis and, to-top-it-off, were dragged into a high court battle.

Kids are the most unpredictable future cost. Young adults need more help to become independent than we ever needed, or expected, from our parents. Different times. Their education and housing were the two biggies for us. Until kids are established in their adult lives expect to be handing-out large wodges in their direction. 

We will be drawing the line at regularly caring for any grandchildren. Not a snowball's chance in hell of our becoming unpaid child minders in retirement. We want to enjoy our grandchildren, not raise them. The kids have been warned.

MallyGirl

These unpredictable costs have somewhat influenced our retirement plan. Our daughter will be starting a 6 year course in a couple of weeks so that will probably mean we keep working till she finishes (a year longer than my original plan as every other uni would have been 5 years). She will be in halls for the first 3 years but will need help with deposits etc for the other 3, although I would hope that the same deposit can roll forward (call me an optimist!).
6 years is a long time so we will continue to monitor - if OH gets close to LTA then that will be the nod to quit. We had planned on some big holidays in the next couple of years but that seems a long way off right now (as does our refund for this year's thanks to Virgin and their 120 day refund shenanigans).