Should she stay or should she go....

ethelthefrog

Good morning fellow members.
just after thoughts please, my wife has pension pot of £90000. Has turned 55. I’m working , retire in 2 yrs( early) but will work different job after. (Ie self employed.) 3 yrs left on mortgage. The statement for wife says a pension of £3000 per annum. (Approx £4000 at 60.  Not a lot and she will get half my pension when i die. Plus insurances etc.
now, i how do folk think if she 1.  Takes all pot now. Yes know about tax etc. But could enjoy and pay things off etc . And use my pension /earnings. Later,as well as down size house. Kids grown up but like most of you probably help them out still.
2.  Leave it keep adding and claim later. 
3. Take lump. And do draw down later.
to be honest, a little lump sum now would help out the house coffers, hols etc. ( a good setting for when i retire)
pension pot doesn’t seem a lot to me, and feel could get some benefit of getting some cash now.  But just your thoughts please. Or am i going down the wrong path. And bide are time.   
Many thanks ethel

Stubod

On the face of it I would leave the pension well alone and keeping adding as much as possble for as long as possible, however you have not really provided enough info to advise anything more specific, eg how much do you want / need as an income during retirment, (annual number), and how much other income will you have towards this, eg state pensions private pensions and other savings/investments.

MallyGirl

Is the £3000 per annum a projection or is it a defined benefit pension. If DB then there is no pot. If it is Defined Contribution (DC) then there is a pot but the pension it provides will depend on the investments and be subject to the highs and lows of the stock market.
Assuming DC and there is a pot:
It would be very unwise to pay unnecessary tax by taking it all out. what would she do with £90k in cash? You say enjoy and pay things off - do you have expensive debt or are you just thinking mortgage which is probably at a fairly low rate?
She could take the 25% tax free lump sum of £22.5k plus an income that stays under £12k for the year and then pay no tax this year. 
Do you have a decent pension lined up to support the both of you or should her pension be made to last longer?
Have you obtained state pension forecasts - if she has gaps then filling them would be a good investment

Albermarle

As Stubod posted you would be better to be a bit more methodical and work backwards from how much you will actually need as a couple in retirement ( or when one is retired and the other isn't) . Is your DB pension large enough ? what about what your spouse will get if you die . Have you got other investments ?
Presume you will both get full state pensions at 67 ?

If you think you will not need it later then MallyGirls suggestion to take 25% tax free and then take the rest over a few years keeping under the personal tax allowance , is the usual recommended route.

Finally pension pots can be passed on without adding to any inheritance tax calculations , in case that was of interest.

Marcon

ethelthefrog said:

Good morning fellow members.
just after thoughts please, my wife has pension pot of £90000. Has turned 55. I’m working , retire in 2 yrs( early) but will work different job after. (Ie self employed.) 3 yrs left on mortgage. The statement for wife says a pension of £3000 per annum. (Approx £4000 at 60.  Not a lot and she will get half my pension when i die. Plus insurances etc.
now, i how do folk think if she 1.  Takes all pot now. Yes know about tax etc. But could enjoy and pay things off etc . And use my pension /earnings. Later,as well as down size house. Kids grown up but like most of you probably help them out still.
2.  Leave it keep adding and claim later. 
3. Take lump. And do draw down later.
to be honest, a little lump sum now would help out the house coffers, hols etc. ( a good setting for when i retire)
pension pot doesn’t seem a lot to me, and feel could get some benefit of getting some cash now.  But just your thoughts please. Or am i going down the wrong path. And bide are time.   
Many thanks ethel

The problem with a little lump sum is how quickly it gets spent, especially with children in the frame! Without knowing what sort of standard of living you have now/expect in retirement, it's impossible to know what might or might not be a good idea. Will you wife resume paid employment? What does her state pension provision look like? If you are retiring early, how much damage will that do to your own pension provision, both state and private?

mark13

Mallygirl's suggestion seems good if you don't need the money later. You can also recycle some of the lump sum back intoyour wife's pension pot to get the tax relief. On a pot that size and at age 55 you wouldn't want to pay tax on any withdrawals. 

LHW99

Worth also working out what both of you would be left with if either steps in front of the proverbial bus. You may be fine, but if her pot has been taken and spent, will she have enough left to live the life she is used to, or will she be having to sell the house, look for somewhere small to buy (or rent) while mourning your loss?

Its morbid, but does need thinking about.

ethelthefrog

Thanks for all your comments.  Bit more info if helps. I have a nhs pension. Which ill be drawing early. 1995 version. Ill leave the 2015 part. Yes to contributions for full state at 67. If and when i croak it. Wife gets half my pension. Debts are ok and manageable, was. Just thinking of clearing mortgage and a few extras . When i retire, will still do self employed ad hoc stuff. Keep bit busy and pay for few luxuries etc.  I did not know pension pots could be carried on, and will look into. As for walking in front of bus.. there are a few life insurances in place to cover. And then my pension which she’ll  get. Tbh i think we’re think £3000 pa not much. Will help, but perhaps £21000 maybe nice while can enjoy it.  As for type of retirement..difficult to say,  debt free, a few hols help kids, but nothing to extravagant, but will work till unable if poss myself. Be it. Ad hoc, etc.  Thanks for your help. Ethel

Keep_pedalling

ethelthefrog said:

Thanks for all your comments.  Bit more info if helps. I have a nhs pension. Which ill be drawing early. 1995 version. Ill leave the 2015 part. Yes to contributions for full state at 67. If and when i croak it. Wife gets half my pension. Debts are ok and manageable, was. Just thinking of clearing mortgage and a few extras . When i retire, will still do self employed ad hoc stuff. Keep bit busy and pay for few luxuries etc.  I did not know pension pots could be carried on, and will look into. As for walking in front of bus.. there are a few life insurances in place to cover. And then my pension which she’ll  get. Tbh i think we’re think £3000 pa not much. Will help, but perhaps £21000 maybe nice while can enjoy it.  As for type of retirement..difficult to say,  debt free, a few hols help kids, but nothing to extravagant, but will work till unable if poss myself. Be it. Ad hoc, etc.  Thanks for your help. Ethel

You need to answer the question about what sort of pension your wife has.

p00hsticks

ethelthefrog said:

Thanks for all your comments.  Bit more info if helps. I have a nhs pension. Which ill be drawing early. 1995 version. Ill leave the 2015 part. Yes to contributions for full state at 67. If and when i croak it. Wife gets half my pension. Debts are ok and manageable, was. Just thinking of clearing mortgage and a few extras . When i retire, will still do self employed ad hoc stuff. Keep bit busy and pay for few luxuries etc.  I did not know pension pots could be carried on, and will look into. As for walking in front of bus.. there are a few life insurances in place to cover. And then my pension which she’ll  get. Tbh i think we’re think £3000 pa not much. Will help, but perhaps £21000 maybe nice while can enjoy it.  As for type of retirement..difficult to say,  debt free, a few hols help kids, but nothing to extravagant, but will work till unable if poss myself. Be it. Ad hoc, etc.  Thanks for your help. Ethel

You still haven't said whether your wife's £3000 is from a Defined Benefit pension (with £90,000 being the CETV) or if it's the projected income from a £90,000 defined contribution pot ?

What percentage of your NHS pension would she get if that bus happened, and how much money does that equate to ?

From what you've said so far, and without any idea of how much you think you'll actually need to live on in retirement, it sounds to me as if your wife doesn't have a great deal of pension provision in her own right and is going to be very reliant on you - in her shoes I'd be reluctant to be cashing it all in at such an early age and paying a load of unecessary tax just for a few 'extras'.

Keep_pedalling

Have you obtained state pension forecasts for yourself and your wife?