Newbie: losing sight of the wood for the trees...

Ldak

Thanks Dazed.
If the abacus is correct DB3's lump sum is indeed more generous than DB2's as it will take 4.9 more years to be paid back by annual pension payments than DB2's would, not accounting for inflation as I believe DB2 is increased by RPI and DB3 by CPI and that's getting too heavy for me I think.
Can I ask your thoughts on the effort worthiness of paying any excess annual pension payments up to £2880 net into a new SIPP, building it to £10k than cashing it out tax free, as I understand is currently possible? Or, as my amounts are modest to some on here, is it probably best to S&S ISA it and take tax free at will. It would also would be independent of future negative (from savers' perspective) pension fiddling by government. As I do believe that with, more modest amounts, efficiency is arguably 'more' important than with larger amounts, just as those space constrained are more susceptible to the effects of clutter.

Thanks again.

Ldak

Dazed, sorry just discovered the trivial commutation rules doesn't mean up to £10 is tax free. Erm...

Ldak

Neither are fingers working today....meant £10k of course.
Mental note: use Preview button....

Dazed_and_C0nfused

Ldak said:

Thanks Dazed.
If the abacus is correct DB3's lump sum is indeed more generous than DB2's as it will take 4.9 more years to be paid back by annual pension payments than DB2's would, not accounting for inflation as I believe DB2 is increased by RPI and DB3 by CPI and that's getting too heavy for me I think.
Can I ask your thoughts on the effort worthiness of paying any excess annual pension payments up to £2880 net into a new SIPP, building it to £10k than cashing it out tax free, as I understand is currently possible? Or, as my amounts are modest to some on here, is it probably best to S&S ISA it and take tax free at will. It would also would be independent of future negative (from savers' perspective) pension fiddling by government. As I do believe that with, more modest amounts, efficiency is arguably 'more' important than with larger amounts, just as those space constrained are more susceptible to the effects of clutter.

Thanks again.

Contributing £2,880 to get the £720 tax relief is a very popular choice, particularly when you can take taxable money out without paying any tax, as you could at the moment, and limiting future DC contributions to £4k isn't an issue.

But given you have an £8k DB pension already in payment how are you planning on taking £10k (or £7.5k taxable income) out tax free?

LHW99

You make an earlier comment that you are married.

It is often therefore worthwhile looking at your retirement needs as a couple.

Does she have any private pension provision?

What is her SP situation?

If either are low, that could be a reason to take a lump sum from a DB, as you are allowed to pay into your wife's pension (or give her money to do so), or top up her NI contributions (generally good value).

Perhaps not something everyone is happy to do, but if you are, you can have two tax-free personal allowances to use once both are retired.

Ldak

Dazed_and_C0nfused said:

Ldak said:

Thanks Dazed.
If the abacus is correct DB3's lump sum is indeed more generous than DB2's as it will take 4.9 more years to be paid back by annual pension payments than DB2's would, not accounting for inflation as I believe DB2 is increased by RPI and DB3 by CPI and that's getting too heavy for me I think.
Can I ask your thoughts on the effort worthiness of paying any excess annual pension payments up to £2880 net into a new SIPP, building it to £10k than cashing it out tax free, as I understand is currently possible? Or, as my amounts are modest to some on here, is it probably best to S&S ISA it and take tax free at will. It would also would be independent of future negative (from savers' perspective) pension fiddling by government. As I do believe that with, more modest amounts, efficiency is arguably 'more' important than with larger amounts, just as those space constrained are more susceptible to the effects of clutter.

Thanks again.

Contributing £2,880 to get the £720 tax relief is a very popular choice, particularly when you can take taxable money out without paying any tax, as you could at the moment, and limiting future DC contributions to £4k isn't an issue.

But given you have an £8k DB pension already in payment how are you planning on taking £10k (or £7.5k taxable income) out tax free?

Sorry, again, not clear enough.
Thought to do the £2880 contributions to a new additional DC pension in future from any unspent income, taking 25% tax free out and leaving the rest until a new plan/possibility emerges. It was just to get the £720 back really.
I erroneously thought one could trivially commutate a DC pension less than £10k tax free, that I'll have build up over several years from the £2880 amounts paid in.
I thought , without earned/salaried income, one was limited to £2880 not £4k.
Many thanks Dazed. I've learnt from you.

Ldak

LHW99 said:

You make an earlier comment that you are married.

It is often therefore worthwhile looking at your retirement needs as a couple.

Does she have any private pension provision?

What is her SP situation?

If either are low, that could be a reason to take a lump sum from a DB, as you are allowed to pay into your wife's pension (or give her money to do so), or top up her NI contributions (generally good value).

Perhaps not something everyone is happy to do, but if you are, you can have two tax-free personal allowances to use once both are retired.

Hello LHW99, all input very much appreciated.

Am indeed married and agree about looking at synergistic possibilities re pensions/allowance utilisation.. She, like me, has breezed through our 30 years together without thinking of the future in pension terms, just concentrated on bringing up two kids we're pretty proud of. Not unique, I know, but proud nonetheless. Unfortunately for me, she's really enjoying her work and colleagues and wants to continue for another couple of years as she has always been more anxious/sensible about money than .

She has a workplace DC pension that she always thought she was limited to contributing 8% to with a matching employer 14% via salary sacrifice. Turns out she could contribute much more though the employer contribution was not linear. Learnt about carry forward and for her March payroll, changed her contribution to 76.5% and received a 20.85 employer contribution. That was to max this years annual allowance and utilise carry forward for the last three years as a catch up. Will reset her contribution from the April payroll to build up to the £40k annual allowance in a less hasty way if doable. Might build up an ISA for her first/instead of to give her something to spend whilst waiting for her SP. She's about to be 63.

She is forecast for a full SP already without future contributions, in case she retires imminently.
I looked into giving her some of my unused personal allowance but as she earned over the limit, couldn't.
Really appreciative of your input.

Dazed_and_C0nfused

I looked into giving her some of my unused personal allowance but as she earned over the limit, couldn't.

Eligibility to either apply for or receive Marriage Allowance isn't based on how much you earn it is based on which tax rate(s) you pay.

So if you have say £55k in taxable income and pay some higher rate tax you aren't eligible to receive Marriage Allowance.

But if you have taxable income of say £58k and contribute £8k (gross) to a relief at source pension scheme then you wouldn't be liable to any higher rate tax and would be eligible to receive Marriage Allowance.

All the above assumes you aren't Scottish resident for tax purposes.

Ldak

Dazed_and_C0nfused said:

I looked into giving her some of my unused personal allowance but as she earned over the limit, couldn't.

Eligibility to either apply for or receive Marriage Allowance isn't based on how much you earn it is based on which tax rate(s) you pay.

So if you have say £55k in taxable income and pay some higher rate tax you aren't eligible to receive Marriage Allowance.

But if you have taxable income of say £58k and contribute £8k (gross) to a relief at source pension scheme then you wouldn't be liable to any higher rate tax and would be eligible to receive Marriage Allowance.

All the above assumes you aren't Scottish resident for tax purposes.

Thanks Dazed.
True. Her taxable income was fractionally over £50k.
Thanks for all your pointers.