How to decide

Green_hopeful

Hi

How do people decide what to do to manage their pension finances?

I am 54, 55 in October. I am not working and have no intention of going back to work. I am currently living on my savings, I probably have £70k. I have several pensions.

DB that pays out at 60 and pays about £20k per annum 
DB that pays out at 67 and pays about £10k per annum
DC worth about £100k from my most recent job
SIPP worth about £80k
and some odd DC and AVC smaller bits
state pension prediction of £10.7k there is some COPE but the HMRC website has stopped telling me how much. I think about £30 per week.

Currently I need about £27k per year to maintain my lifestyle.

My plan is to take £16666 tax free from the SIPP each year and top it up with savings until 60 when my first DB pension starts to pay. 

The DC pension has sent me a Maturity Pack. Obviously loads of options. I don’t need the money at the moment but is it worth leaving it in my old workplace pension. How does anyone know?

eastcorkram

I've not heard of a maturity pack. Is this something you asked for, or did it just turn up?

Marcon

Green_hopeful said:

Hi

How do people decide what to do to manage their pension finances?

I am 54, 55 in October. I am not working and have no intention of going back to work. I am currently living on my savings, I probably have £70k. I have several pensions.

DB that pays out at 60 and pays about £20k per annum 
DB that pays out at 67 and pays about £10k per annum
DC worth about £100k from my most recent job
SIPP worth about £80k
and some odd DC and AVC smaller bits
state pension prediction of £10.7k there is some COPE but the HMRC website has stopped telling me how much. I think about £30 per week.

Currently I need about £27k per year to maintain my lifestyle.

My plan is to take £16666 tax free from the SIPP each year and top it up with savings until 60 when my first DB pension starts to pay. 

The DC pension has sent me a Maturity Pack. Obviously loads of options. I don’t need the money at the moment but is it worth leaving it in my old workplace pension. How does anyone know?

Forget COPE. It's a source of endless confusion and only used to work out the starting level of your state pension  (you get the better of the 'old' and 'new' system). If you're really curious, see https://forums.moneysavingexpert.com/discussion/6445947/good-and-short-explanation-of-cope/p1

A free appointment with PensionWise might be a good idea: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

Once you've got a better grasp of the basics, you should feel more confident about taking decisions - eg if you don't need the money from your DC pension, why would you withdraw from a tax-favoured environment and put it somewhere else which won't be (it's well above the ISA annual contribution limit).

eastcorkram said:

I've not heard of a maturity pack. Is this something you asked for, or did it just turn up?

DC schemes send them out when someone is close to their chosen retirement age. Doesn't normally mean they have to actually take the pension then.

molerat

state pension prediction of £10.7k there is some COPE but the HMRC website has stopped telling me how much. I think about £30 per week.

COPE is irrelevant, it is how much you have accrued at April 2023 / 2024 as shown on the forecast that is important, that is what you need to check and not just the big green box.

kempiejon

I combined all my DC pensions form a handful of employers into 1 SIPP with HL.
I also have 2 x ISAs ,1 x DB pension of less than the annual allowance and some non sheltered holdings to harvest dividends and capital gains allowances annually. Cash float for a couple of years spending.

My current plan is to take the full 25% from the SIPP to fill ISAs, SIPP (£2880) and other non sheltered accounts moving as per new tax year.
Take DB and top up from SIPP to max the annual allowance and supplement with funds from the ISA until state pension then reassess how to use the SIPP and ISAs pots for drawdown with an eye to tax/inheritance efficiencies.

I manage all my own investments and have been for years I think I know what I can extract safely. I've a good handle on expenses and predict a surplus of income which I can fritter away or put aside for unexpected stumbles down the road.

dunstonh

How do people decide what to do to manage their pension finances?

They look at their objectives and the best way to achieve them.

I don’t need the money at the moment but is it worth leaving it in my old workplace pension. How does anyone know?

If its the best option, then leave it.  If its not the best option, then move it.

I've not heard of a maturity pack. Is this something you asked for, or did it just turn up?

Providers start the notification process years in advance of the selected retirement age.   You get information in phases leading up to the selected age.

leosayer

On the face of it, you need £27k per year but by age 67 you will have over £40k coming in from DB and State pensions.
Have you consider starting your DB schemes at age 55? There will be a reduction in the annual pension but you'll get the money so much earlier.

LHW99

Does your state pension statement say you cannot improve your forecast, or does it tell you you need ? number of years to get a full pension?

Paying voluntary NI to get your SP made up to full is usually a good idea if you can afford it.

You will be OK when you have both DB's and the SP. You have ~5 years before your first DB, and ~12 before the second DB (& SP).

Worth working out what you need p.a. over that timescale.

eg £30k x 5 years = £150k

    £10k  x 7 years = £70k

So £210k in total (plus a bit for inflation, although the figures above give income a little more than your £27k (gross?) estimate)

It looks like you are fairly close to that with the various DC's & AVC's, given a bit of growth over 12 years.

Just make sure you can access the AVC's separately from the DB pensions. Possibly they may have to be transferred? (someone here will know if that can be done)

Green_hopeful

LHW99 said:

Does your state pension statement say you cannot improve your forecast, or does it tell you you need ? number of years to get a full pension?

Paying voluntary NI to get your SP made up to full is usually a good idea if you can afford it.

You will be OK when you have both DB's and the SP. You have ~5 years before your first DB, and ~12 before the second DB (& SP).

Worth working out what you need p.a. over that timescale.

eg £30k x 5 years = £150k

    £10k  x 7 years = £70k

So £210k in total (plus a bit for inflation, although the figures above give income a little more than your £27k (gross?) estimate)

It looks like you are fairly close to that with the various DC's & AVC's, given a bit of growth over 12 years.

Just make sure you can access the AVC's separately from the DB pensions. Possibly they may have to be transferred? (someone here will know if that can be done)

I think I could pay another three years for the max state pension. I don’t have any retrospective ones that I can pay so would need to do it going forward. 

I think there is something with the AVC and needing to take it with the rest of the pension from that employer. I have 10 years of DB and 1 year of DC with that employer. 

LHW99

Paying an extra 3 years voluntary contributions (I think the years would need to be after 2016) would be recovered in a relatively short time after retirement, and the payment would be increased by the triple lock for the rest of your life (or the near future at least). A (very) cheap version of an index-linked annuity.