60 with 60k and what to do...?

badmemory

I wondered if dad was quite a bit older it may still apply in the sense that it has been used to uplift mum's to the max.

JustAnotherSaver

Maybe that's how she is at full whack then? 

He worked all his life whereas as previously mentioned she basically stopped at 41.

The difference in age was 19yrs.

badmemory

I would suggest a double check just in case it says something along the lines of if she earns credits somehow for the next 5 years.  Some of these gov sites are as clear as mud.

thegreenone

When you are able, please double check your Mum's forecast.

I did mine on Sunday and in big bold letters at the top it says I'm eligible for £179 but below it says the currently I'm on track for £148 unless I top up 6 years, which I fully intend to do in April.  I don't have my calcuIations with me but it was something like I pay £4700 now and will get £30k more pension over 20 years. 

I hope your Mum has received enough top ups but please double check.  I'm not insinuating that your Mum misread.

JustAnotherSaver

I'd not seen your replies. I messaged her today to have a re-check.

Out of curiosity, how does a pension work for a 60yr old? Is it basically like a savings account?

Let me explain...

I put £xyz in to my pension & that's it - locked away until i'm in my 50s. Can't touch it. Perhaps there's some loophole where I can but as far as i'm aware that's it under lock & key.

My mum is 60 this year and as far as I'm aware, 60yr olds can access their pension pot fine enough.

So she puts £x-amount in to her pension and then one day says you know what I'd like to buy myself a new [whatever]. Is it just a simple case of logging in, hitting withdraw & then picking up the cash from her current account (i'm assuming they'll be linked in some way perhaps).

Dazed_and_C0nfused

So she puts £x-amount in to her pension and then one day says you know what I'd like to buy myself a new [whatever]. Is it just a simple case of logging in, hitting withdraw & then picking up the cash from her current account (i'm assuming they'll be linked in some way perhaps).

It isn't quite that easy but not too far off.

Say she contributed £2,000 to a personal pension or SIPP.

The pension company will add £500 in basic rate tax relief, courtesy of HMRC, so she has a pension fund of £2,500.  It doesn't matter if she pays income tax or not, they will add the basic rate tax relief to any eligible contributions (non earners are limited to £2,880 per tax year, £3,600 with the tax relief added).

 She decides to take the whole lot out then 25% would be tax free and 75% taxable.  The tax ultimately due would depend on what other taxable income she has in the same tax year.

She needs to look at the providers charges, there may be fees particularly where people contribute, leave the fund in cash and then withdraw it all as soon as the tax relief is added.

Also, once taxable money is taken any future contributions to a defined contribution pension are limited to £4k per tax year.  The exception being where an annuity is purchased.

Daliah

P1Fanatic said:

I'm new to this but pretty sure the surviving spouse doesn't get any of the deceased partners state pension. They maybe entitled to their partners credit years etc to boost their own pension if its not already at the full amount. But sounds like you mum is already at the full amount so that wouldn't apply.

It is possible that she may be entitled to some of her late husband's SERPS, if he had any. The rules are on the govt website, complex, and totally depend on personal circumstances. Definitely something OP's mum should pursue with the DWP - but she should be aware that any entitlement will not be worked out until she is actually entitled to apply for her SP, which is 4 months before she reaches her state pension age.

It is not possible any longer to use a partner's contribution years to add to your own years (but as you say, seems irrelevant for OP's mum even if it was still possible).

Albermarle

So she puts £x-amount in to her pension and then one day says you know what I'd like to buy myself a new [whatever]. Is it just a simple case of logging in, hitting withdraw & then picking up the cash from her current account (i'm assuming they'll be linked in some way perhaps).

Unfortunately the withdrawal process is a bit more long winded than just pressing a button , more long winded with some providers than others .

Also she might find the taxable being taxed and have to claim it back .

NannaH

I’m approaching 60 and contribute to a Sipp with Hargreaves Lansdown, I don’t work and pay in £2880/£240 a month and it gets an extra £720 a year in tax relief.   So 10 years will give her an extra £7200. 

She could just leave it in cash and when she wants it she can simply request a payment on the website,  there is no charge for holding cash. 

She could put £20k in a stocks and shares isa to try for a bit of growth for at least 5 years, ideally 10 years+.   A fund like VLS40 or VLS60 or HSBC global strategy cautious would be my choice for medium risk. 

That leaves her £20k for easy access.  

xylophone

Your father was born  around 1943?

If so, he would have  reached  state pension age under the old  (pre 2016) system.
 

Your mother will reach SPA under the new system

See  Scenario 2

a. Dependant reaches State Pension age in single tier
b. Contributor reaches State Pension age OR dies in the

current system 

 starting page 12 here
  https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181235/derived-inherited-entitlement.pdf 

On top of this should've also added that she does get a fraction of my dad's pension which was further reduced from what it could've been simply due to their age gap despite being married for about 30yrs.

This is not unusual.

See https://www.thisismoney.co.uk/money/pensions/article-6447319/Can-pension-scheme-reduce-widows-payouts-shes-younger.html