That crept up on me ..

999frogs

Looks like I'm in a fortunate position compared to a lot

• Full NI contributions
• Half a dozen private pensions including a contracted out and a final salary (NRD 60)
• Approx 6k pa (less state pension deduction) from final salary scheme - which I've not drawn from yet so will be backdated 51 months lol
• Approx 250k in the other pots
• Still working (slightly into 40% tax), retirement date 8/26.
• Ex smoker, BP & Cholestrol medicated
• No debt
• Consider me risk averse

I _think_ I understand my options, happy to be corrected.

1. Draw or don't draw on the final pension, big tax hit on first month (ie 51 months worth)
2. As each plan hits NRD (except the final salary one) - take up to 25% of the combined pot as a tax free drawdown. Depending on plan rules, this could be spread over a number of years
3. Decide on how to structure the remaining N% on each plan - annuity with or without increases, fixed term, taxed lump etc
4. Possibly consolidate for ease of management. (Taking into account xfer costs, benefits I might lose etc)
5. Am I right to say that I don't pay NI after NRD ? If I start to draw on any pension before NRD, am I liable for NI on that (seems harsh) ?

I'm considering talking to an IFA but also stingy
I've read the pensionwise stuff
Sorting out beneficiary statements, LPOA & LWaT

Have I got it about right ? Grateful for any observations and/or advice.

This weekend looks like an excel weekend 

Many thanks

FIREDreamer

999frogs said:

1. Draw or don't draw on the final pension, big tax hit on first month (ie 51 months worth)

Why is there a big tax hit?

Brie

Will the DB pension allow you to back date 51 months?  Wasn't an option with mine even though they gave me incorrect info about my NRD.  Then again the amount I was paid monthly did increase due to not being paid.

Silvertabby

Have you actually checked your State pension forecast?  It's just that a lot of people are still making the huge mistake of assuming that 35 full (financial) years of NI contributions = the full new State pension.

squirrelpie

Q5 - payment of NI depends on state pension age. Nothing to do with the normal retirement date of any other pension.

"I'm considering talking to an IFA"

Sounds like a good idea.

SacredStephan

999frogs said
Am I right to say that I don't pay NI after NRD ? If I start to draw on any pension before NRD, am I liable for NI on that (seems harsh) ?

You don't pay NI on your earnings after you reach State Pension Age. You don't pay NI on income from a pension.

DRS1

Ex smoker, BP & Cholestrol medicated

May get you an enhanced annuity if you go that route.

Draw or don't draw on the final pension, big tax hit on first month (ie 51 months worth)

As others have said that seems odd.  If you have not taken your pension at NRA then most final salary schemes treat that as late retirement and pay a higher pension to account for the reduced period it is expected to be paid (ie increased by a Late Retirement Factor).  They don't tend to backdate the payment to NRA.

Is there a lump sum payable when you start to take the final salary pension?  It may be presented as a commutation of the pension - eg a pension of £x pa or a lump sum of £y and a pension of £z pa.  People on here will be quick to tell you if the commutation rate is any good.

Possibly consolidate for ease of management. (Taking into account xfer costs, benefits I might lose etc)

You should be looking closely at the benefits you might lose bit anyway.  For example a guaranteed annuity rate (GAR) often depends on you taking an annuity from the insurance company your policy is with on a specified date - your selected retirement age. If you take a transfer elsewhere you will lose the GAR but even if you stay with the original insurer you may lose the GAR if you don't take it on the right date.

Marcon

DRS1 said:

Draw or don't draw on the final pension, big tax hit on first month (ie 51 months worth)

As others have said that seems odd.  If you have not taken your pension at NRA then most final salary schemes treat that as late retirement and pay a higher pension to account for the reduced period it is expected to be paid (ie increased by a Late Retirement Factor).  They don't tend to backdate the payment to NRA.

It's not that uncommon. If the scheme doesn't have a late retirement option, then the member will either get pension instalments backdated to the scheme's NRA, or they could lose the right to some or all of the 'overdue' payments - usually any instalments of pension not claimed within 6 years of reaching a scheme's NRA.

OP, you might do better in tax terms if you ask the scheme to give you a year by year breakdown of your backdated final salary pension once you claim it. You have the right to ask HMRC to treat the payments as being taxable in the tax year in which you were entitled to receive your pension (ie from the scheme's NRA). Even without a late retirement factor it will normally have risen to take account of inflationary increases, and of course you wouldn't then have the same hefty sum all falling into the same tax year. 

wjr4

How old are you?

Marcon

wjr4 said:

How old are you?

999frogs said:

Looks like I'm in a fortunate position compared to a lot

• 
  
• Half a dozen private pensions including a contracted out and a final salary (NRD 60)
• Approx 6k pa (less state pension deduction) from final salary scheme - which I've not drawn from yet so will be backdated 51 months lol

...so must be 64 and a bit.

999frogs

FIREDreamer said:

999frogs said:

1. Draw or don't draw on the final pension, big tax hit on first month (ie 51 months worth)

Why is there a big tax hit?

5o odd months of 500pcm is >£25k which (if I drew now) would be a 40% bill. Think I'll wait until I'm retired, at least it will only be 20%. As it's backdated pension payments rather than a lump, I don't expect it would come under the taxfree bit