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

Sea_Shell

What are any potential "governmental" risks to our ongoing retirement?

What rules, or thresholds might be amended that could put a spanner in our works?*

We think (hope) that we're "safe" from any meddling, as most things that could cost us, would hit those with much less too.

Personal allowance (x2) is adequate.
Don't need £20k ISA limits.
I can still access my DB at 55 ( just😉)

Anything I've not thought of?

IHT will be our heir's problem, as that would be a chunk if we got hit by a bus.



* Notwithstanding market volatility or inflation.

Arkers

Hi Sea_Shell,

I have less then a year until I can access my Sipp, may I be nosey and ask how and what percentage you're going to drawdown? I have a DB pension for everyday costs, so I think I'm going to take 25% straight way if the market is favourable. 

I think the main change will be to the lifetime limit (if that's the correct term.) With specific provisions for certain sectors eg senior medics, and civil servants. If the Government changes colour!
My brother is also worried about his private school teaching job. However I think any loss of charitable status of the independent sector may well be challenged in court. 

From what you've outlined previously you seem to have stress tested your pension. Maybe you might fancy a few cashews in future, but hopefully not too much meddling.... fingers crossed. 

njm123

I'm in a similar position to you,  early retired and living off savings until pensions kick in.  Hopefully we don't get any economic shocks that mean I need to start taking the pension early but if that happens others will be a lot worse off.

Until the manifestos are published it's hard to know what (if anything) to worry about as so far we're only hearing headlines of what they do.

Once manifesto's are published we can look at what's in them as they usually stick to that and probably more importantly what's not as that's where the scope is for nasty surprises over the next few years.

Personally I don't expect much dramatic change but rather a continuation of any tax cuts etc favouring "Hard working families"  and possibly excluding pensioners and the economically inactive.  See recent National Insurance cuts vs Income tax cuts or allowances being lifted generally.

Two things I'll be looking for are

- Plans for Council Tax or it's replacement.  Including any re-banding.
- Plans on how to pay for net zero firming up.

Mainly so I can reassess and firm up what to do with living arrangements longer term , as in my circumstances the changes needed for net zero are just not a good investment and would be better done when the property changes hands.   
   

Sea_Shell

Arkers said:

Hi Sea_Shell,

I have less then a year until I can access my Sipp, may I be nosey and ask how and what percentage you're going to drawdown? I have a DB pension for everyday costs, so I think I'm going to take 25% straight way if the market is favourable. 

I think the main change will be to the lifetime limit (if that's the correct term.) With specific provisions for certain sectors eg senior medics, and civil servants. If the Government changes colour!
My brother is also worried about his private school teaching job. However I think any loss of charitable status of the independent sector may well be challenged in court. 

From what you've outlined previously you seem to have stress tested your pension. Maybe you might fancy a few cashews in future, but hopefully not too much meddling.... fingers crossed. 

Currently, assuming no major changes to rules/allowances, the plan is to pull my full 25% out at 55, and move the bulk of it to our S&S ISAs.
Then drawdown the balance at my PA each year.  
This should last about 13.5 years, taking me just beyond SPA.    Markets notwithstanding.
Any balance remaining will probably be left to sit there. 

I realise that this moves my 25% pension from being protected from IHT, to not, but it does then give me the flexibility of accessing it as and when I want, regardless of PAs and tax. 

The interest on cash, should be managed between our starter rates etc.    But hopefully we'll have spent some of it! 

We plan to move a bit further away from cash (currently 20% of pot), once we have almost £2000 hitting our account every month.   When the DC's are gone, they're gone!


Lifetime allowances are never going to be an issue, unless dramatically reduced, and the schools issue has no relevance to us.    

DH has some DB pensions to come, and i'm not sure how the lifetime allowance is calculated for them, but they are modest, and are due to payout in the region of £10k in todays money.   25x ?  30x?   

Even if 30x that would only be £300k, plus the £175k already crystallised.    If that's how it works? 


I love cashews...but they give me wind!!!  

enthusiasticsaver

Your plans sound solid and much the same as we did in taking our 25% tax free lump sums and putting them into our stocks and shares ISAs.  I am not sure if the government or any future government will change the £20k limit but that will not affect us either.  DH pays tax on his private pension and will also pay it on his state pension which pays out later on this year.  My DB pensions are just under the PA (less marriage allowance given to DH) and I draw on my stocks and shares ISAs for the remainder of our income. 

Gifting and IHT will probably affect us as my mum gifts monthly amounts to both me and my two siblings as her savings were building up beyond what would be needed should she need care.  She has a large pension from my Dad and currently gifts given out of income are free from IHT but that may change. All the previous gifts she has given us are now more than 7 years ago so outside the PET liability period. 

The only other thing which may affect us is market volability on our ISAs. Our pensions are all DB.  

kempiejon

Like a couple of comments on here I've been working to the plan to crystallise the pension in to drawdown, access my 25% from the SIPP bang it all in the ISA and extract income from the SIPP up to personal allowance. Supplement with ISA if need. I am rethinking that.
I think I pay less  oops more tax on the pension in total by taking it like that between 55 and 67 (state pension starts) than if I leave the pension intact and take up to personal allowance plus the 25% UFPLS. 
If I'm lucky personal allowance will increase too. I need to build a spreadsheet and run some examples.

There's enough in my ISA for an OK income and I think that potentially leaves more in the SIPP after normal pension age for IHT planning.

Sea_Shell

kempiejon said:

Like a couple of comments on here I've been working to the plan to crystallise the pension in to drawdown, access my 25% from the SIPP bang it all in the ISA and extract income from the SIPP up to personal allowance. Supplement with ISA if need. I am rethinking that.
I think I pay less  oops more tax on the pension in total by taking it like that between 55 and 67 (state pension starts) than if I leave the pension intact and take up to personal allowance plus the 25% UFPLS. 
If I'm lucky personal allowance will increase too. I need to build a spreadsheet and run some examples.

There's enough in my ISA for an OK income and I think that potentially leaves more in the SIPP after normal pension age for IHT planning.

We ran the numbers, and the conclusion we came to is that it is a zero sum game. 

Either you take 25% upfront and potentially pay tax on the balance, which hopefully grows.
or you leave it all to grow in the pension, and then each withdrawal is 25/75%.

However, we want the flexibility of having the money out, ASAP, and within our control, to access freely, as and when needed.

Obviously it depends on the size of ones DC pension pot, but with ours being "modest", we can pretty much get them both emptied, by using JUST our personal allowances, before SP kicks in. 

DH will have to pay some tax once he has his SP and DB, but I would only then have my SP. 


Some might say that the woes of the country are apparently our fault, for arranging our affairs in such a way, so as to not pay tax!  

kempiejon

Sea_Shell said:

We ran the numbers, and the conclusion we came to is that it is a zero sum game. 

Either you take 25% upfront and potentially pay tax on the balance, which hopefully grows.
or you leave it all to grow in the pension, and then each withdrawal is 25/75%.

However, we want the flexibility of having the money out, ASAP, and within our control, to access freely, as and when needed.

Obviously it depends on the size of ones DC pension pot, but with ours being "modest", we can pretty much get them both emptied, by using JUST our personal allowances, before SP kicks in. 

DH will have to pay some tax once he has his SP and DB, but I would only then have my SP. 


Some might say that the woes of the country are apparently our fault, for arranging our affairs in such a way, so as to not pay tax!  

Thanks for your thoughts. Obviously this is not a one size fits all and for me there's a clear tax advantage taking the SIPP as UFPLS before normal pensions age, yours not so much but it is worth noting for other readers. I used to prefer the idea of having all my money outside of pensions because the rules surrounding them were more complicated. When I was younger I made most of my provision in ISAs at 50+ the pension became more attractive. However the numbers make it clear.

Some might say the woes of the country are the rule makers' fault for enabling those with a few quid to step out of the tax system. Certainly tax manipulation has been a benefit to my wealth accumulation and being out of the tax system in early retirement has made that possible. I also have the chance to pass wealth down a generation.

Sea_Shell

End of May figures.

Total pot £642,600
Rolling 12 months spends to date £16,500, including £2900 in May  (new cooker and mattress mainly)
Which equates to 2.57% of pot.   

DT2001

Brilliant thread as have your previous ones been. Going back to your original assessment of your plan shows how important the last few years of working can be to build up ‘enough’. Looking just at your current figures it would appear that you could have retired even earlier as you are now so much closer to your OH’s DB starting and then drawing a smaller % of your pot BUT your initial pot would have been smaller and have had to fund longer. I think, at times, people forget the key objective which is to be able to fund your retirement whatever is thrown at you and this will in the majority of cases mean ending up with large(r) pots when we pass on. I am working on my decumulation plan including how and when (age of recipients/funds hitting certain figures) to pass on any excess if not hit by SORR.

Thanks again for your willingness to share so many financial details.