10 years from retirement. Advice please

Koloto

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

I just wanted to gauge thoughts on where I should be at with my DB pension pots. I have several, from different employments, and am paying into three currently. I am planning to retire at 65 in 10 years. The pots have varying sums from 8k to 40k and are in a range of investments. Lifestyle and mixed asset classes predominantly although there is some in gilts too. The total is around 150k (tiny compared to most) and I am putting 19% of my salary into my company DB pension (7.75K) and I also have two final salary schemes which will give me about 9K a year.

would appreciate thoughts as to what the approach should be. My thoughts are drawdown when the time is right.

sevenhills

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

If you are 55 it would be better to take advantage of the pension tax relief of a SIPP, I have an HL SIPP and it very similar to an ISA except the ISA does not benefit from the pension tax relief.

Linton

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

I just wanted to gauge thoughts on where I should be at with my DB pension pots. I have several, from different employments, and am paying into three currently. I am planning to retire at 65 in 10 years. The pots have varying sums from 8k to 40k and are in a range of investments. Lifestyle and mixed asset classes predominantly although there is some in gilts too. The total is around 150k (tiny compared to most) and I am putting 19% of my salary into my company DB pension (7.75K) and I also have two final salary schemes which will give me about 9K a year.

would appreciate thoughts as to what the approach should be. My thoughts are drawdown when the time is right.

I assume you mean DC pension pots.  You cant pay into ex-employer DB pensions.  Is your current "DB pension" also a DC pension or another final salary one? If a DC pension is it included in the £150K?  If it is a DB pension what is the expected income when your retire?

How much income/year do you need to continue your current standard of living during retirement?

mooneysaver

sevenhills said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

If you are 55 it would be better to take advantage of the pension tax relief of a SIPP, I have an HL SIPP and it very similar to an ISA except the ISA does not benefit from the pension tax relief.

This is incorrect, money taken from a pension is subject to income tax whereas withdrawals from an ISA are not subject to income tax or CGT.

Bravepants

mooneysaver said:

sevenhills said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

If you are 55 it would be better to take advantage of the pension tax relief of a SIPP, I have an HL SIPP and it very similar to an ISA except the ISA does not benefit from the pension tax relief.

This is incorrect, money taken from a pension is subject to income tax whereas withdrawals from an ISA are not subject to income tax or CGT.

But a SIPP does allow one to draw 25% tax free.

Also, SIPP users benefit further if they are a higher rate tax payers while working, but are going to be basic rate taxpayers upon retirement and drawing income from the SIPP.

Koloto

Linton said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

I just wanted to gauge thoughts on where I should be at with my DB pension pots. I have several, from different employments, and am paying into three currently. I am planning to retire at 65 in 10 years. The pots have varying sums from 8k to 40k and are in a range of investments. Lifestyle and mixed asset classes predominantly although there is some in gilts too. The total is around 150k (tiny compared to most) and I am putting 19% of my salary into my company DB pension (7.75K) and I also have two final salary schemes which will give me about 9K a year.

would appreciate thoughts as to what the approach should be. My thoughts are drawdown when the time is right.

I assume you mean DC pension pots.  You cant pay into ex-employer DB pensions.  Is your current "DB pension" also a DC pension or another final salary one? If a DC pension is it included in the £150K?  If it is a DB pension what is the expected income when your retire?

How much income/year do you need to continue your current standard of living during retirement?

I’ve probably confused my terminology. I apologise. It’s all a little confusing to a layman, A couple were former stakeholder pensions and a couple were from when I was contracting.

Basically I have 150k in money purchase schemes, contribute 7.75k a year to a company scheme. This is separate to the final salary schemes.

I have two final salary schemes. One is in the PPF and will pay 1800 a year when I get to 65 and the other lays 7,700 a year when I get to 62.5 although I am minded to leave it til 65.

I think 20k a year is fine for me. 

dunstonh

mooneysaver said:

sevenhills said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

If you are 55 it would be better to take advantage of the pension tax relief of a SIPP, I have an HL SIPP and it very similar to an ISA except the ISA does not benefit from the pension tax relief.

This is incorrect, money taken from a pension is subject to income tax whereas withdrawals from an ISA are not subject to income tax or CGT.

It is not incorrect.
Tax relief of 20% gives equates to an uplift of 25%.    When drawing the pension,  25% is tax free and the rest is taxed within income tax bands.    There is usually some personal allowance available.  So, that bit will be tax free.  The rest will be basic rate.   However, because of the tax free cash, the tax take will equate to 15% above the personal allowance.   a higher rate taxpayer will be even better off.

mooneysaver

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

I just wanted to gauge thoughts on where I should be at with my DB pension pots. I have several, from different employments, and am paying into three currently. I am planning to retire at 65 in 10 years. The pots have varying sums from 8k to 40k and are in a range of investments. Lifestyle and mixed asset classes predominantly although there is some in gilts too. The total is around 150k (tiny compared to most) and I am putting 19% of my salary into my company DB pension (7.75K) and I also have two final salary schemes which will give me about 9K a year.

would appreciate thoughts as to what the approach should be. My thoughts are drawdown when the time is right.

dunstonh said:

mooneysaver said:

sevenhills said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

If you are 55 it would be better to take advantage of the pension tax relief of a SIPP, I have an HL SIPP and it very similar to an ISA except the ISA does not benefit from the pension tax relief.

This is incorrect, money taken from a pension is subject to income tax whereas withdrawals from an ISA are not subject to income tax or CGT.

It is not incorrect.
Tax relief of 20% gives equates to an uplift of 25%.    When drawing the pension,  25% is tax free and the rest is taxed within income tax bands.    There is usually some personal allowance available.  So, that bit will be tax free.  The rest will be basic rate.   However, because of the tax free cash, the tax take will equate to 15% above the personal allowance.   a higher rate taxpayer will be even better off.

Have another go but this time make sure you read the question thoroughly before you try to answer.

underground99

mooneysaver said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

I just wanted to gauge thoughts on where I should be at with my DB pension pots. I have several, from different employments, and am paying into three currently. I am planning to retire at 65 in 10 years. The pots have varying sums from 8k to 40k and are in a range of investments. Lifestyle and mixed asset classes predominantly although there is some in gilts too. The total is around 150k (tiny compared to most) and I am putting 19% of my salary into my company DB pension (7.75K) and I also have two final salary schemes which will give me about 9K a year.

would appreciate thoughts as to what the approach should be. My thoughts are drawdown when the time is right.

dunstonh said:

mooneysaver said:

sevenhills said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

If you are 55 it would be better to take advantage of the pension tax relief of a SIPP, I have an HL SIPP and it very similar to an ISA except the ISA does not benefit from the pension tax relief.

This is incorrect, money taken from a pension is subject to income tax whereas withdrawals from an ISA are not subject to income tax or CGT.

It is not incorrect.
Tax relief of 20% gives equates to an uplift of 25%.    When drawing the pension,  25% is tax free and the rest is taxed within income tax bands.    There is usually some personal allowance available.  So, that bit will be tax free.  The rest will be basic rate.   However, because of the tax free cash, the tax take will equate to 15% above the personal allowance.   a higher rate taxpayer will be even better off.

Have another go but this time make sure you read the question thoroughly before you try to answer.

Why don't you 'have another go'? It was clarified that the OP has 2 final salary schemes that will give them 9k a year, but that the 'my company DB pension (7.75k)' was actually a DC pension.  So from age of 65, the final salary / DB income is lower than the current personal allowance and it's not wrong to suggest that 'there is usually some personal allowance available'. Even if there were no personal allowance available, SIPP still beats ISA due to the 25% tax free amount being able to be taken from the tax-relieved gross amount.

Dunstonh is correct that the advantages from getting tax relief on the way in to a pension combined with (a) being able to take a tax free lump sum from the pension and (b) potentially having some personal allowance available to take money out of the pension at 0%, is going to be better net result than using ISA where there is no tax relief.

So Sevenhills's comment that a pension is 'very similar to an ISA except the ISA does not benefit from the pension tax relief', together with dunstonh's comments that if you are already 55 and investing for 10+ years it is better to take advantage of the pension tax relief of a SIPP, are well founded. Your comments that say they are 'incorrect' and should 'read the question thoroughly' could perhaps be turned around onto yourself.  

Linton

Koloto said:

Linton said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

I just wanted to gauge thoughts on where I should be at with my DB pension pots. I have several, from different employments, and am paying into three currently. I am planning to retire at 65 in 10 years. The pots have varying sums from 8k to 40k and are in a range of investments. Lifestyle and mixed asset classes predominantly although there is some in gilts too. The total is around 150k (tiny compared to most) and I am putting 19% of my salary into my company DB pension (7.75K) and I also have two final salary schemes which will give me about 9K a year.

would appreciate thoughts as to what the approach should be. My thoughts are drawdown when the time is right.

I assume you mean DC pension pots.  You cant pay into ex-employer DB pensions.  Is your current "DB pension" also a DC pension or another final salary one? If a DC pension is it included in the £150K?  If it is a DB pension what is the expected income when your retire?

How much income/year do you need to continue your current standard of living during retirement?

I’ve probably confused my terminology. I apologise. It’s all a little confusing to a layman, A couple were former stakeholder pensions and a couple were from when I was contracting.

Basically I have 150k in money purchase schemes, contribute 7.75k a year to a company scheme. This is separate to the final salary schemes.

I have two final salary schemes. One is in the PPF and will pay 1800 a year when I get to 65 and the other lays 7,700 a year when I get to 62.5 although I am minded to leave it til 65.

I think 20k a year is fine for me. 

Yes you did confuse matters with your terminology: DB=Degined benefits=final salary or similar, DC=Defined Contribution=money purchase.

Anyway, your income at retirement is about £9K State Pension + £9500 from your DB pensions, both of which I expect will be increased by inflation between now and then.  So a total of £18500 at current prices.  Your DC pensions at their current value could be equivalent to about £5K/year from drawdown.  In 10 years time, taking into account your current contributions the value of your DC pot could easily have doubled..  So in total that should be more than enough to give you £20K after tax with some left over to pay for earlier retirement or the occasional major extravagence.

Your plan to drawdown makes sense as it will give you flexibility in retirement and you dont need extra guaranteed income.

 I assume your desired income figure of £20K is the total net value taking into account all your income streams and that your DB pensions increase with inflation. If the assumptions are wrong that may change matters somewhat. 

Given you seem to be doing well in meeting your retirement needs, what can you do now:
1) To simplify matters you could look into merging your DC pensions.
2) You should get a State Pension forecast to check you are due the full amount.
3) You should check that your investments are appropriate.  If you let us know what you are invested in we can comment.  You can afford to be reasonably adventurous with your investments since most of your needs will be satisfied by your guaranteed incomes.

Koloto

Linton said:

Koloto said:

Linton said:

Koloto said:

Hi All,
My previous post here asking for advice was replied to with some very helpful posts and I now have a share trading account with freetrade and a stocks and shares ISA with HL across a range of funds (5j. This is on a 10-15 year view and savings so I am happy to ride out any short term ups and downs with this.

I just wanted to gauge thoughts on where I should be at with my DB pension pots. I have several, from different employments, and am paying into three currently. I am planning to retire at 65 in 10 years. The pots have varying sums from 8k to 40k and are in a range of investments. Lifestyle and mixed asset classes predominantly although there is some in gilts too. The total is around 150k (tiny compared to most) and I am putting 19% of my salary into my company DB pension (7.75K) and I also have two final salary schemes which will give me about 9K a year.

would appreciate thoughts as to what the approach should be. My thoughts are drawdown when the time is right.

I assume you mean DC pension pots.  You cant pay into ex-employer DB pensions.  Is your current "DB pension" also a DC pension or another final salary one? If a DC pension is it included in the £150K?  If it is a DB pension what is the expected income when your retire?

How much income/year do you need to continue your current standard of living during retirement?

I’ve probably confused my terminology. I apologise. It’s all a little confusing to a layman, A couple were former stakeholder pensions and a couple were from when I was contracting.

Basically I have 150k in money purchase schemes, contribute 7.75k a year to a company scheme. This is separate to the final salary schemes.

I have two final salary schemes. One is in the PPF and will pay 1800 a year when I get to 65 and the other lays 7,700 a year when I get to 62.5 although I am minded to leave it til 65.

I think 20k a year is fine for me. 

Yes you did confuse matters with your terminology: DB=Degined benefits=final salary or similar, DC=Defined Contribution=money purchase.

Anyway, your income at retirement is about £9K State Pension + £9500 from your DB pensions, both of which I expect will be increased by inflation between now and then.  So a total of £18500 at current prices.  Your DC pensions at their current value could be equivalent to about £5K/year from drawdown.  In 10 years time, taking into account your current contributions the value of your DC pot could easily have doubled..  So in total that should be more than enough to give you £20K after tax with some left over to pay for earlier retirement or the occasional major extravagence.

Your plan to drawdown makes sense as it will give you flexibility in retirement and you dont need extra guaranteed income.

 I assume your desired income figure of £20K is the total net value taking into account all your income streams and that your DB pensions increase with inflation. If the assumptions are wrong that may change matters somewhat. 

Given you seem to be doing well in meeting your retirement needs, what can you do now:
1) To simplify matters you could look into merging your DC pensions.
2) You should get a State Pension forecast to check you are due the full amount.
3) You should check that your investments are appropriate.  If you let us know what you are invested in we can comment.  You can afford to be reasonably adventurous with your investments since most of your needs will be satisfied by your guaranteed incomes.

I have had a state pension forecast and am entitled to a full state pension on retirement. I will get it, currently, when I am 67.