Advice needed

kempiejon

To avoid fallng below national minimum wage with the works pension we can use SIPPs to make over payments. In those last few years in the run up to pensons commencement plans putting all one can spare into the SIPP acccelerates the pension pot without the worry of tying the money up for too long.

Cobbler_tone

kempiejon said:

To avoid fallng below national minimum wage with the works pension we can use SIPPs to make over payments. In those last few years in the run up to pensons commencement plans putting all one can spare into the SIPP acccelerates the pension pot without the worry of tying the money up for too long.

I guess in specific situations. However, you might need to have some cash behind you as you'll be funding it from your remaining net pay, which presumably will be heavily depleted if you've taken it (for example) from £70k a year to NMW.
I'd hope not too many people in their 50's+ sacrifice too many years trying to lump the max amount in at the expense for a decent living for the moment. Probably not too different to a 30 something piling everything to clear the mortgage ASAP, although time becomes a bit more precious as you get older IMO.

It is an interesting debate. I CANNOT convince my OH to increase her contributions beyond a certain amount. It just doesn't sit right with her to have her net pay under a certain amount, which allows her to save. I have spreadsheet to show the take home pay vs contribution level, within a fiver.
She is in her final year before VS (under the £30k) and she came around to contributing about 30% of her pay. I've shown her the numbers and the calculations, the tax saving etc but people view things differently. 
I technically could afford to increase mine...but again, I want the money each month to play with and no way I want to be counting pennies in order to put maximum contributions in. I am at the next level to my OH though.

I can only speak from personal experience and the people I work with. People putting extremely high percentages into their pension (regardless of age and retirement date) is the exception as opposed to the norm. They'll put the 6% in to get the 12% from the company, with the remainder going in their pocket. I'm leading the way on that one!
As an aside, I also don't know anyone retired who pays £2,880 into a SIPP each year. I know there are on here but I don't know them. 

kempiejon

@Cobbler_tone Yes leftfield, wringing that last drop of juice from the tax treatment but it makes sense to me; I've always been an exception though. I want financial independance early, those drops all help.

Just to stick some numbers in as an example a 53 year old who has a good chunck behind them say £85k in ISAs, premium bonds and savings, employed full time earning £30k a year making personal and company contributions to a work place pension could spend down from savings and the balance of contributions to the max into a SIPP with a plan to start withdrawing soon after 55. They'd get an extra bonus of relief on the £12k personal allowance that they'd not paid tax on.
The £2880 to £3600 well who wouldn't?

LHW99

It would be worth checking whether you have to take the income from the DB pensions at the same time as the PCLS - you often do.

If you put the DB's into payment at 55, then they would likely to be reduced by a factor (compared to what you get at NRA) to allow for them being paid for longer.

DRS1

Andersoncouncil said:

 Meaning, I’ll be taking the full 25% from the DC’s and whatever cash equivalent I have in the DB’s at 55. I’ve not decided when to actually retire and intend to keep working for as long as I’m enjoying it. That may change dependent on what’s happening in my life in the next few years though.

What exactly does this mean?

When people talk about cash equivalent they usually mean a cash equivalent transfer value which raises the spectre of you trying to transfer the DB scheme benefits to some DC arrangement.

But then your question seems to assume you will be receiving a pension from the DB schemes as a taxable income.

Which is it? 

Taking the pension is likely to be the path of least resistance.  You will pay 40% tax on it while you are working in your current job but you can increase your pension contributions to net off the extra income (which does not look as if it is going to be enormous - but obviously you need to make sure you don't exceed any limits on contributions)

You mention that you don't really look at the investments and for the DB schemes there is no reason why you should.  But why not do that for the DC schemes?  Do you think it is something you could get interested in?

One other thought - is it too late now to consolidate the DB Schemes into Alpha?  You don't need that income from 55 really do you?

Cobbler_tone

kempiejon said:

The £2880 to £3600 well who wouldn't?

Apart from everyone I know who retired early, I have no idea. 
Maybe my circle is affluent and don’t bother?

We probably forget that this forum is a pension focused bubble. 

Andersoncouncil

Thanks everyone who’s replied. Given me a lot to think about and definitely opened up a few ideas that I hadn’t thought of. Appreciate the responses.