Pension Planning beyond 2020 for next 20 years

handsome0707

Our Current Portfolio 

Happily Married for 30+ years and intend on staying happily married for next 30+ years (hopefully)

My Age: 58,  Wife Age: 53

Total Cash Isa: 260K (Both)

Total Cash in Bank accounts : 35K (Both)

Stocks & Shares ISA: 130K (Both)

1 Buy to let property, Joint Names, completely mortgage free, worth £450K bringing Gross rent of £1900 a month managed by Agents

1 Main Home Primary Residence, Joint Names, worth £550K again mortgage free

Both currently working full time 

1 My Gross Salary : £40K (basic rate tax payer)

Pension: 

a My final DB salary with a scheme retirement age 65 and has an annual Pension currently worth £18K per anum based on last statement in Nov 2020 or an alternative of reduced pension + a lump sum of 3* pensionable salary AND still contributing 9% of Gross Salary . Started the Scheme 31 years ago. 

b i also have a Serps pension pot worth @£37K for being contracted out. 

c i have an AVC pot worth @£10K not contributing any more. 

d currently have 41 years worth of Full NI contributions, however, according to HMRC records still short by 3 years to reach the required 35 years for full state pension of 

£175.20 per week  due to being contracted out of Serps, at the age of 67 

2 Wife Salary: £70K and another 2nd part time salary of 8K (higher rate tax payer)

Pension: 

a. She has a final salary DB scheme pot currently worth £20.5K per anum, based on her last statement in August 2020 or a reduced pension + a lump sum of 3* pensionable salary with a scheme retirement age of 60 and still contributing 14% of Gross salary . Started scheme 24 years ago.

b. She has a Serps pension pot currently worth £13K for being contracted out

c. She also has an AVC pot currently worth £12K and still contributing £400 a month

d she currently has 37 years worth of Full NI contributions, however, according to HMRC records still short by 3 years to reach the required 35 years for full state pension of 

£175.20 per week  due to being contracted out of Serps, at the age of 67.

e. A small DB pension from her part time role started 1 year ago which can be drawn at age 65, currently contributing 9% of her partime salary.

Children grown up and paid of their student loans, and paid a 25% deposit for their 1st home purchase so no worries about children as all self sufficient now. 

Our Current expenses: @ £2500 a month NET total including food, bills, cars, holidays etc due to no mortgage commitments, equivalent to @ 40K gross salary per anum. 

Also looking to retire in a couple of years when i ll be 60 and OH will be 55 so effectively 5 years early for both of us until our final salary DB pensions kick in. My 65 and OH 60

Any Advice on followings would be much appreciated: 

1. Is it worth withdrawing pensions early to fund next 5 years or should we wait until ‘scheme rules of 65 for me and 60 for OH And Use our cash ISA/savings/ rental income to fund these 5 years?
2. Is it worth taking the full pensionable salary or the alternative of lump sum + reduced pension at scheme retirement age?
3. Is it worth converting DB to DC as the pots would effectively die with us in current schemes and nothing will be left to pass to children?
4. Based on above figs, any idea what the current DC pot sizes might be worth for both of us if we did look at transfering from DB schemes to DC (CETV)?
5. Is it also possible to take a reduced state pension earlier than 67?
6. When is the best time to cash in serps/Avc pensions, letters say anytime after age of 55?
7. Again, looking at the above figs and our portfolio as a whole , for Inheritance tax purposes, What the best way to give our children between now and our deaths in future, without paying 40% tax and at the same time ensuring both our well being is secure in old age ensuring our children don’t betray us at the same time in old age?
8. In Near future, would all our pensions (@ 10 in total) show up on pension dashboard or only some, when ready?
9. We both remember contracting out back in 1988-89 yet my serps pot is worth £37K and her’s is £13K and both our earnings were on par, what could be the reason for this vast difference. The only thing i can think of is I joined the DB scheme in 1989 and She joined the DB scheme in 1997 due to children upbringing, OR has anything gone missing anywhere on her part??? If so will this show up on the future pensions Dashboard at some point. If not, how can we find out reasons for this. 
10. We also complete self assessments due mainly to rental income and will continue into the future and with several pension incomes to come in future, how can we track that exact amount of taxes NI etc are correctly paid without incurring penalties. 
11. Do the above Serps pension pots have a bearing on Anual allowance (40K) since nothing has ever been contributed in these pots from our part in last 25 odd years?

Dazed_and_C0nfused

Have you considered approaching an IFA (not a FA)??

5 is a no.

10 is simple, just complete the returns correctly and you will pay the correct tax.  Or use an accountant if you don't feel able to complete the returns accurately.

Thrugelmir

8. Very unlikely

Why so much cash? 

Are you maximising your pension scheme contributions. given you plan to retire "early" ? 

The BTL return doesn't look great.  Factoring in agents fees, other costs and tax.  Will you incur a large CGT liability on disposal?

Albermarle

I do not think an internet forum is the right place to ask so many detailed questions and for detailed analysis .
For one thing you will get a lot of diverse opinions and some incorrect ones. Probably better to get some professional advice , even if it is only a one off .
At a quick glance it looks like you will have a very comfortable retirement whatever you do .
Regarding points 3 and 4 , converting DB to DC is a very regular discussion point on this forum , so try doing a search or scroll through a few pages .
Point 10 - No 

handsome0707

Just need effective planning to get through 1st 5 years before appropriate pension ages kick in.

handsome0707

Thrugelmir said:

8. Very unlikely

Why so much cash? 

Are you maximising your pension scheme contributions. given you plan to retire "early" ? 

The BTL return doesn't look great.  Factoring in agents fees, other costs and tax.  Will you incur a large CGT liability on disposal?

handsome0707

Yes, we are maximising pension portfolio to effectively save 40% tax now and pay 20% later on pension withdrawals because we are unlikely to have a pension income >50K (higher rate threshold) 

handsome0707

Thrugelmir said:

8. Very unlikely

Why so much cash? 

Are you maximising your pension scheme contributions. given you plan to retire "early" ? 

The BTL return doesn't look great.  Factoring in agents fees, other costs and tax.  Will you incur a large CGT liability on disposal?

handsome0707

There will be CGT liability of somesort, however the buy to let was our primary residence for many years before being let out. Yes, Estate agents do charge fees but in past I managed it myself but unfortunately i have no choice now because age is finally catching up. 

IAMIAM

When I read posts like this, I always feel it is a 'look at us with over millions in assets and cash and what should we do with it all....I mean really....

garmeg

handsome0707 said:

There will be CGT liability of somesort, however the buy to let was our primary residence for many years before being let out. Yes, Estate agents do charge fees but in past I managed it myself but unfortunately i have no choice now because age is finally catching up. 

You are only 58 though!