Basic pension planning now our situation has changed. Long post but all comments welcome!

ChasingtheWelshdream

Evening everyone. :waves:

A few months ago I posted this (below) when I first started thinking about pensions.

https://forums.moneysavingexpert.com/discussion/5886452/pension-planning-for-non-tax-payers

A lot has changed since then - a build up of debts (now gone ), a redundancy, new job for hubby and now a new job for me. Unfortunately we didn't manage to save anything into a pension at all.

Assuming I stick it out, my new job has a steeply graded pay progression over three years (eventually doubling my take home), and I will be a basic rate tax payer from next month. We do not 'need' the extra money, so I want to put as much of this aside for the future, so pensions/savings have become interesting again.

There is a 10 year age gap between hubby and I, and I do not plan to work in this job until state retirement age (currently 68). I am 37 and would love to build up enough funds so I can drop to 2 days a week at around 50/55 with some decent savings behind us (see my previous post - we do not anticipate needing a huge income). I am also hoping to build up a small business to provide a similar income to hubby's, but I have a long way to go so I can't plan for that income for a while.

At the same time, hubby is happy to continue his 2 days a week for as long as he can. His business is always in the background providing a decent drip-feed income. If we can drop to the same level of income we currently have, with enough savings/pension to draw on we will be very happy.

So, I am wondering how best to begin planning.

* I have 11 years left to contribute for a full state pension. Hubby has yet to check his.

* Hubby and I are now both tax payers (hubby pays a one off-bill on self-assessment only)

* Both members of LGPS (me nearly 11 years, hubby nearly 2 years). I have a pre 2014 final salary element on mine.

*Hubby has approx £40k in a Prudential With Profits scheme, due to SERPs but he has not contributed for many, many years. The Man From the Pru keeps writing to discuss this, but we have yet to make an appointment.

I have the option of additional AVCs with the LGPS, but my understanding is that they could not be touched until I draw the main pension - is this correct?

In which case, is it better to invest in a separate personal pension so I can access it earlier?

I wondered again about a LISA (I'm 37) but if I can't access until 60 then would a 'standard' ISA be better, along side a personal pension?

Again, I am only looking at options in readiness for my first payday. :rotfl:

Regarding any savings/pension contributions outside the LGPS, does it matter who actually pays the money in? By that I mean, I will be earning more than hubby, and all our money is treated as joint in our accounts. Does each of us have to prove that our wages are contributing to our pensions only, or can payments just come from our joint accounts?

I ask the above as I am unsure if we will completely lose our tax credits - we may be entitled to a small amount for a couple of years. I understand we deduct payments made into a personal pension from our declared income, so I wonder if they should be kept separately so we don't fall foul of any rules. That may be a question for the benefits board.

I realise this is a very long post, and I salute you if you have got this far. As of last year, I had a much better understanding of where to go following all your advice. But with the situation changes, I'm now not so sure!

Many, many thanks for getting this far! :T

stoozie1

ChasingtheWelshdream wrote: »

I ask the above as I am unsure if we will completely lose our tax credits - we may be entitled to a small amount for a couple of years. I understand we deduct payments made into a personal pension from our declared income, so I wonder if they should be kept separately so we don't fall foul of any rules. That may be a question for the benefits board.

Are these Child tax credits? Your amounts may vary but in my circumstances, and additional £1 paid in to my pension gets me 41p additional CTC. Try playing with the .gov calculator online to see how your numbers work.

I'm sorry but I don't understand your point about 'kept separately', pensions are always in a sole name, so are always separate. I have nil earnt income other than benefits, so when adding to my SIPP, I tick 'from savings' as the source of income. You could tick 'from salary' as you have sufficient earnings.

I do not think this is particularly scrutinised/to worry about, as I understand it is a measure to avoid pension lump sum recycling.

I hope this helps!

Good luck.