Trigger getting pulled today - Anyone see any Major mistakes with my action plan???

wjr4

Why are you purchasing the annuity with L&G? Are they the best rate on the market? If you haven’t checked others, you could be losing lots of money. 

NoMore

How  much do you need to live on and I'm not sure what's your plan for when you stop working in two years time. Also have you checked your State Pension entitlement.

Also am I the only one who finds it surprising that the OP's employer will allow him to access the works pension to buy an annuity and then also continue to pay into the same pension ? I suppose strictly there's nothing to prevent this, but its not something I have considered or heard of. People access previous work pensions and contribute to new ones all the time, I suppose. which is the same net effect.

RNV

sgx2000 said:

2nd_time_buyer said:

sgx2000 said:

I know others have asked before at work.
And the answer from HR has always been the same
"Your pension increases in increments with service,  But, at 9% it stops and you cannot add to it"

It is slightly strange to set such a low cap, as they would also save the employer NI contributions, so you would think it would be in their interest.  

Agreed especially with 300+ employees. 'But it is, what it is'

I assume that then the  tax relief would be added to this £3,577  so,  with tax relief added approx. £4,471
Obviously not wanting to go over my lump cash payment into the Aviva pension taking me above my salary 

Be careful with your numbers and please re-read the "theory" about Sal Sac.  There is no additional tax relief added if you are contributing via Salary Sacrifice. Sal Sac is basically a portion of your untaxed salary that you sacrifice (i.e you already got that tax relief by not being taxed on it in the first place). 

Another point - are you sure that "at 9% it stops" applies to the entire contribution ?  May be worth double checking with HR. It may be a badly worded statement to define employer's (additional matching) contribution only, i.e. your employer will not increase their contribution any more to match any further increase of yours.

sgx2000

wjr4 said:

Why are you purchasing the annuity with L&G? Are they the best rate on the market? If you haven’t checked others, you could be losing lots of money. 

My initial quote from my current provider Aviva was approx. £5600 (with medical added)
I then tried other providers
The HL online quote platform is particulary good.  Allowing for the input of medical info.
Over a period of a couple of months playing with this L&G where 100% of the time the highest quote at approx £5900
I the went online direct to L&G, again with medical they Offered approx £6100
Then I 'twigged'
Adding £28,000 from saving to my Aviva pension before starting the L&G annuity Would take this even higher
Todays quote form L&G is £541.37 per month or £6 496 per year

This is all based on being ....Flat, Single life, 10 year guarantee, 25% TFLS

So by a bit of 'jiggery pokery' 

I have increased the initial quote fom Aviva by approx. £896 per year  by adding tax relief and moving to L&G

There are obviously ways to wring every £ out of the situation, but given the decreasing annuity rates speed is of the essence 

sgx2000

NoMore said:

How  much do you need to live on and I'm not sure what's your plan for when you stop working in two years time. Also have you checked your State Pension entitlement.

Also am I the only one who finds it surprising that the OP's employer will allow him to access the works pension to buy an annuity and then also continue to pay into the same pension ? I suppose strictly there's nothing to prevent this, but its not something I have considered or heard of. People access previous work pensions and contribute to new ones all the time, I suppose. which is the same net effect.

State pension checked - FULL
I have done serious (for me) multiple spreadsheets re life expenses
To keep my current lifestyle inc holidays car etc etc   
I need £18,000 net in retirement
By my current calculation my income from State, DB pension & annuity will be 
approx.£22,000 net
Current saving approx £60k 

Wife 17 years younger still working for the foreseeable future

I will become a house husband - taking some pressure off my wife

also

In a phone call with Aviva yesterday they said it would be no problem to leave a residual amount with them..
I just ask L&G to take just £112,000 and leave the rest
This has also concerned me (hence the phone call).  But, Aviva didnt seam fazed by this at all...

sgx2000

Thanks RNV

I will check this with HR tomorrow

But either way it seams safe to add £28,000 to the pension to get the additional tax relief of £7,000 before I start the annuity ball rolling

NoMore

sgx2000 said:

NoMore said:

Also am I the only one who finds it surprising that the OP's employer will allow him to access the works pension to buy an annuity and then also continue to pay into the same pension ? I suppose strictly there's nothing to prevent this, but its not something I have considered or heard of. People access previous work pensions and contribute to new ones all the time, I suppose. which is the same net effect.

In a phone call with Aviva yesterday they said it would be no problem to leave a residual amount with them..
I just ask L&G to take just £112,000 and leave the rest
This has also concerned me (hence the phone call).  But, Aviva didnt seam fazed by this at all...

I'm not worried about the Pension Provider to them all you are doing is accessing your pension, I was more worried about your employer continuing to pay in despite you accessing the pension. It may not be a problem, it just seems strange to me. I would be confirming with your HR that you will still get employer contributions, even though you are using the pension

sgx2000

Thanks for this NoMore

I am pretty sure it is ok
I have spoken to a couple of other members of staff who have also dropped down to 4 days and no one mentioned this being a problem

But I will check

Thanks

hugheskevi

What is the motivation for choosing an annuity with no escalation, ie, no inflation protection? 

And why single life, ie dies with you, when you have a much younger partner?

sgx2000

l

Thanks for the reply hugheskevi

My current expenses will be more or less covered by my state pension and DB pension (both hopefully cpi)
The quotes I got where with a 10 year guaranty.

So If I died the day after the annuity starts my wife would have this income for the next 10 years.
This would take her almost to the point her pension would be available.
Also she would receive half my DB pension for life (enough to cover council tax and electric/gas)
She would only have to find water, internet & car food etc
She also has a good secure job that pays fairly well
She has her own pension which is doing well

Given that the house is owned outright  (£320K)
I doubt very much she would struggle

Hopefully when she reaches mid 50's we could look at her retiring too...

The quotes for an RPI linked pension where approx £4k

£6500 not linked

So a tiny bit of a gamble on inflation

A bit more income during the early years of retirement followed by a little less income in the later years – seams fairly practical