Fast approaching retirement & worried.

Dex58

sammyjammy said:

Would your wife be entitled to claim Contribution base Employment and Support allowance (called New Style ESA), she would need a fit note from her GP but if entitled would boost income by a minimum of £300 every four weeks.

I hadn’t even considered that. She retired early due to ill health but because she received a £20k lump sum from her DB pension I presumed that it was means tested & she wouldn’t have any entitlement. But I’ll check. Thank you.

Dex58

allanm02 said:

"I think UFPLS would be preferable to drawdown as most of the 25% tax free entitlement would remain invested."

Not sure about this bit. An UFPLS is equivalent to taking a tax free lump sum, moving the rest to drawdown, but then taking it all out of drawdown again on the same day. The net effect is the same, but for the far greater flexibility of true drawdown. If you want to remain invested, stick the TFLS in an ISA.

Maybe I’ve got it wrong but I thought UFPLS was a bit like using your dc pot as a bank account & 25% of each withdrawal was tax free. That would be a simple solution to bridge the two years till sp kicks in & then I could reassess.
I also thought drawdown meant taking 25% of the entire pot upfront (which I don’t really need to do) or moving chunks of the pot into drawdown as & when required which sounds a bit more complicated.

sjp999

These folks helped me understand the various types of drawdown

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

Grab an appointment and have a notepad ready - they do send a summary of your chat once it's over. 

molerat

Dex58 said:

Thanks, I have been on the govt gateway site & checked our entitlement at retirement age (66 in both cases) It says £9237 for me & £9141 for my wife. It’s not full entitlement due to approx 12 years contracted out in both cases (always a bit baffled by the whole contracting out thing!!) It also says it’s the maximum we can expect so I presume future NI contributions won’t make any difference. 

You seem uncertain about what you will get.  If you have not yet reached the full amount then future years will add to the amount currently held.  Post up all the numbers and someone will sense check it for you.  It is easy to get confused by all the numbers and you need to understand what they mean.

Alice_Holt

Dex58 said:

sammyjammy said:

Would your wife be entitled to claim Contribution base Employment and Support allowance (called New Style ESA), she would need a fit note from her GP but if entitled would boost income by a minimum of £300 every four weeks.

I hadn’t even considered that. She retired early due to ill health but because she received a £20k lump sum from her DB pension I presumed that it was means tested & she wouldn’t have any entitlement. But I’ll check. Thank you.

   1)   New style ESA is not means tested, but depends on NI contributions in the last 2 tax years before the year in which it is claimed.  However, Pension income over £85 pw will reduce the amount.  It can be paid for 12 months, or until SPA if placed in the support group.
         https://www.gov.uk/guidance/new-style-employment-and-support-allowance
        https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/employment-and-support-allowance/help-with-your-esa-claim/claiming-new-style-esa/

   2)  Re the SP forecast. 
           "I have been on the govt gateway site & checked our entitlement at retirement age - It says £9237 for me & £9141 for my wife. It also says it’s the maximum we can expect so I presume future NI contributions won’t make any difference.      

      I think you may be wrong with your assumption. The maximum payable figure assumes all future contributions are paid.
        If your wife claims ESA, this will continue her NI contributions.
        You would be sensible to look at voluntary contributions to get to that maximum figure you quoted, once finishing work.  

Dex58

molerat said:

Dex58 said:

Thanks, I have been on the govt gateway site & checked our entitlement at retirement age (66 in both cases) It says £9237 for me & £9141 for my wife. It’s not full entitlement due to approx 12 years contracted out in both cases (always a bit baffled by the whole contracting out thing!!) It also says it’s the maximum we can expect so I presume future NI contributions won’t make any difference. 

You seem uncertain about what you will get.  If you have not yet reached the full amount then future years will add to the amount currently held.  Post up all the numbers and someone will sense check it for you.  It is easy to get confused by all the numbers and you need to understand what they mean.

Presume the last line means more NI contributions won’t make a difference. We both have 47 years contributions to date.

Dex58

Alice_Holt said:

Dex58 said:

sammyjammy said:

Would your wife be entitled to claim Contribution base Employment and Support allowance (called New Style ESA), she would need a fit note from her GP but if entitled would boost income by a minimum of £300 every four weeks.

I hadn’t even considered that. She retired early due to ill health but because she received a £20k lump sum from her DB pension I presumed that it was means tested & she wouldn’t have any entitlement. But I’ll check. Thank you.

   1)   New style ESA is not means tested, but depends on NI contributions in the last 2 tax years before the year in which it is claimed.  However, Pension income over £85 pw will reduce the amount.  It can be paid for 12 months, or until SPA if placed in the support group.
         https://www.gov.uk/guidance/new-style-employment-and-support-allowance
        https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/employment-and-support-allowance/help-with-your-esa-claim/claiming-new-style-esa/

   2)  Re the SP forecast. 
           "I have been on the govt gateway site & checked our entitlement at retirement age - It says £9237 for me & £9141 for my wife. It also says it’s the maximum we can expect so I presume future NI contributions won’t make any difference.      

      I think you may be wrong with your assumption. The maximum payable figure assumes all future contributions are paid.
        If your wife claims ESA, this will continue her NI contributions.
        You would be sensible to look at voluntary contributions to get to that maximum figure you quoted, once finishing work.  

That’s interesting. My wife does receive a small private pension but it’s less than £85 per week.
Re NI contributions…. Our record shows we’ve both paid 47 years of contributions. I though that only 35 years were required to get the full sp?

SomeMadeUpName

Weird, I, like others, thought in 2016 you had a transfer number and then (if it was less than full newSP) anyone could improve it up to full newSP if they had enough years left before SPA to pay the necessary stamp.

Your forecast though does seem to say you are maxed at £177.

Someone who knows more will be along to explain in a moment no doubt.

MallyGirl

It is not that simple - we are in a transitional period where they calculate old rules amount and new rules amount and you get the highest. 35 years only relates to people who make all their contributions post 2016 (I think)

fineclaret

Dex58 said:

allanm02 said:

"I think UFPLS would be preferable to drawdown as most of the 25% tax free entitlement would remain invested."

Not sure about this bit. An UFPLS is equivalent to taking a tax free lump sum, moving the rest to drawdown, but then taking it all out of drawdown again on the same day. The net effect is the same, but for the far greater flexibility of true drawdown. If you want to remain invested, stick the TFLS in an ISA.

Maybe I’ve got it wrong but I thought UFPLS was a bit like using your dc pot as a bank account & 25% of each withdrawal was tax free. That would be a simple solution to bridge the two years till sp kicks in & then I could reassess.
I also thought drawdown meant taking 25% of the entire pot upfront (which I don’t really need to do) or moving chunks of the pot into drawdown as & when required which sounds a bit more complicated.

For both drawdown and UFPLS you nominate a proportion of your DC pot and take 25% of that sum tax free. The difference lies only in how you draw the remainder - you actually use the drawdown pot like a bank account! For example, I wanted to give my kids a bit a couple of years ago, figuring I was more likely to outlive the gift by 7 years then than later. I took £100,000 from the total, £25,000 came straight out tax free (I kept some!), the remaining £75,000 went into a drawdown account from which I take £12,570 a year. When I need more, I'll crystallise more, but I doubt there's much difference in admin.