Pension Advice Needed

princess23

My DH has reached his full amount of years for the state benefit and has a remaining five years to work. He would like to use this extra N.I. money to pay instead now into his private pension is there anyway at all this is possible. T.I.A.
Secondly since taking out a proportion of the tax free allowance he has no longer been able to view his pension forecast with Standard Life could anyone help with this. He has written to them regarding this as they have said that as soon as you touch your pension you lose this facility???

Ayr_Rage

You have to pay NI if you earn enough and it only goes to the government, you cannot allocate it to a private pension.

That applies even if you have sufficient qualifying years for a full state pension and continue to work.

NI does not directly pay for the state pension despite what many think.

Sarahspangles

When you say he has reached the full amount of years for his state pension, is that based on him looking at his pension forecast? He needs to see the words in bold:

£221.20 is the most you can get
You cannot improve your forecast any more.

The reason for confirming this is that lots of people misunderstand the transitional arrangements when they moved to the new state pension. People whose working lives started in 2016 will need to pay for 35 years, which keeps being mentioned in the media or websites, but for those of us who are oldsr it ranges from 30 to 45 or more.

If you don’t see the ‘you cannot improve your forecast any more’ statement then your forecast is based on completing (or buying) more years.

EssexHebridean

I have requested for this to be moved to a more relevant board. 

silvercar

I’ll move this to the pension board.

gm0

The loss of forecast is of practically no consequence.  Just a feature of Standard Life having a poor website for that particular scheme.  Which doesn't cope with whether people have taken from 0 to 25% of their TFC correctly when using one of the "standard assumptions regulatory calculators" - so they have just switched it off rather than spend money on it.

You could put the pension with a modern provider.  And that may be a good or bad idea (cost, investments available etc).  But it won't be for this reason particularly.

You can.  Use any of the SIPP provider calculators on the web.  And enter the pension balance, and play estimating
games.  Unsurprisingly you can - by varying the assumptions generate an excess at the end. Or run out.

More practically - you can take the amount of pot you have remaining - the balance.  And apply 3% to 3.5% to it as an income metric.  This is (very roughly) what a pot can sustain with a moderate degree of safety - very long term 30-40 years.  This assumes a level of inflation indexation but not dealing with world crisis and UK  hyper inflation collapse of the £ - weimar republic / zimbabwe type of scenarios. 

Or you simply look at roughly what joint life annuity the pot would buy - in todays tables for smoking/spouse/indexation. This is the income it would buy - today - secured for life.

Either of those will give you as good a guess - as is available

Nobody knows what annuity prices will be a few years out.  Nobody knows what the long term stock market return will be relative to inflation or what sequence it will arrive in.  Standard life's web calculator for a scheme member will have been based on (FCA regulated) assumptions about those things. Which in recent years may have been presented as hi/med/low forecast.  Which some people believe were tuned down by FCA - bad/worse/terrible - to provide an incentive to save more rather than complacency with a higher forecast.

Sarahspangles

There is a way that your OH could pay less NI, which is by salary sacrificing some of his salary. However his employer has to be willing to run their payroll this way and make employer contributions to a pension scheme. There’s also a chance next week’s budget will make this option less lucrative.

dunstonh

Secondly since taking out a proportion of the tax free allowance he has no longer been able to view his pension forecast with Standard Life could anyone help with this. He has written to them regarding this as they have said that as soon as you touch your pension you lose this facility???

Standard Life plans are rather old fashioned in their set up and their software.  Most of them were never set up to facilitate drawdown.     When Standard Life Aberdeen was broken up,   Abrdn retained all the modern plans and Phoenix took on all the old fashioned plans and bought the Standard Life brand name.    So, if your Standard Life plan was rebranded to Abrdn, you know you are on a modern plan with full functionality but if you are on a Standard Life plan (with reference to Phoenix in the name) then you are on the older style plans.

Many of these older plans have found ways to add some drawdown functionality but not all.  And one area which is pretty consistent with these plans is that they cannot mix and match uncrystallised and crystallised benefits in the same plan like a modern plan can.     

The removal from an online screen is understandable.    Phoenix haven't owned these plans long enough to publicly state what their plans are in the future for them.  i.e. will they try and port them to the old Pearl Assurance software, maintain the current software and improve where possible, port to use brand new software or go with the nuclear option of transferring the pensions to a new product on new software.       Phoenix has used all methods with the different pension books they have bought.   So, we don't know which will apply yet.

As it stands, they are still using the old Std Life software and that wasn't very good to begin with and its unlikely they will spend much on it until they know what they are doing.  

Marcon

princess23 said:

My DH has reached his full amount of years for the state benefit and has a remaining five years to work. He would like to use this extra N.I. money to pay instead now into his private pension is there anyway at all this is possible. 

I think he has 'contracting out' in mind, but that ended in 2016, so no - no longer possible to have NI 'rebates' redirected to a private pension.