What Next? 27 February at 10:29AM in Pensions, annuities & retirement planning 11 replies 650 views

Mocon22

Hi , 
Would appreciate advice/thoughts on my personal situation , been listening to podcasts, reading books and generally overloading my brain with too much information on my retirement planning!
I'll lay out my finances and hopefully give enough of the basics that I can get some pointers.
56 years old
About to start a new job with a salary of £57500 (company pension with this position but don't know the detail yet)
Defined Benefit Scheme in place from a previous role current position £10,800/annum due at 65.
State Pension full contributions current projection £10,800/annum due at 67.
Defined Contribution Scheme with current employer pot of approx £16,000
Mortgage of approx £97k outstanding  plan to have this paid off at age 62/63 equity approx £105k
Cash/Emergeny fund £35k
No ISA's in place.
I'm aiming to retire at 62/63 but unsure best plan to bridge the gap between retirement and my DB scheme kicking in?
Been thinking S&S ISA but open to suggestions not risk averse but also don't want to be meddling with different want to fix and forget.
All feedback/advice greatly appreciated.

Kim1965

How much income do you need at age 62?? 

Mocon22

Enough to live a comfortable but not frugal lifestyle , I should have no mortgage but will need to run a car and hopefully be able to get a holiday etc..........maybe £19k/year?

Gary1984

Find out if you can salary sacrifice into your new pension (assuming it's DC). Putting as much into the pension as possible will be most tax efficient. Don't overpay mortgage, put this extra into the pension as well then use the tax free lump sum to pay off the mortgage when you come to retire. 

Albermarle

About to start a new job with a salary of £57500 (company pension with this position but don't know the detail yet)
Not sure how you can start a new job without knowing the pension details, as it should all be detailed in your employment contract , that you should have received/read/signed?

I'm aiming to retire at 62/63 but unsure best plan to bridge the gap between retirement and my DB scheme kicking in?
Been thinking S&S ISA but open to suggestions not risk averse but also don't want to be meddling with different want to fix and forget.
Due to tax relief, contributing to a pension is more tax beneficial than a S&S ISA , especially as you will be a higher rate taxpayer. So a priority would be to make sure that you contribute enough to make sure you get max 40% tax relief possible. You can not gain more higher rate relief than higher rate tax you actually pay, but even with 20% tax relief, pension is better than S&S ISA, especially at your age.
Do not forget that DC pensions are normally invested in the same way as a S&S ISA would be.

Mocon22

Thank you all for your replies so far....
With regards to my new position I have an email confirming salary and provisional start date just waiting on confirmation of right to work in UK and references , should have the contract in my possession at some point today.

Mocon22

Gary1984 said:

Find out if you can salary sacrifice into your new pension (assuming it's DC). Putting as much into the pension as possible will be most tax efficient. Don't overpay mortgage, put this extra into the pension as well then use the tax free lump sum to pay off the mortgage when you come to retire. 

Hi it will be a DC scheme but I may be missing something ,  how do I get from 62 to 65 without an income as I assumed I wouldn't be able to access any pot I have without it being heavily taxed if I took it early?

NoMore

Minimum normal Pension Access age is 55 (rising to 57 in 2028), so there's no reason you couldn't access it at 62. Tax treatment would be the same.

DB Schemes usually have actuary reduction if taking early than defined retirement age but again tax treatment is the same, just the DB income is usually adjusted downwards to account for the fact you would be receiving it for longer.

Mocon22

NoMore said:

Minimum normal Pension Access age is 55 (rising to 57 in 2028), so there's no reason you couldn't access it at 62. Tax treatment would be the same.

DB Schemes usually have actuary reduction if taking early than defined retirement age but again tax treatment is the same, just the DB income is usually adjusted downwards to account for the fact you would be receiving it for longer.

Thanks for the reply much appreciated

Kim1965

If your mortgage is gone by 62 and you need 19k pa, you need to get your dc up to approx 100k roughly.
 You already have an emergency fund in place. At sp age yiu have enough. 
 Most on this board would want a bigger margin than that i guess. Can you save 20k a year for the next 6 yrs? With 40% tax relief it would be doable? 

Mocon22

Kim1965 said:

If your mortgage is gone by 62 and you need 19k pa, you need to get your dc up to approx 100k roughly.
 You already have an emergency fund in place. At sp age yiu have enough. 
 Most on this board would want a bigger margin than that i guess. Can you save 20k a year for the next 6 yrs? With 40% tax relief it would be doable? 

It's doable with a bonus scheme in place that I believe I can hit most years but it's getting the balance right I still want to have a life between now and retirement think it'll be a combination of the following.... maybe have to go a bit longer than I like , take something PT when the day comes and also max out my DC scheme and keep dreaming!