Pension overwhelmed

kempiejon

Isn't there's a tax advantage to be had spending some non-sheltered and sheltered savings/investment and blitzing a SIPP for a few years?

QrizB

does not have a guarantee period

HLs best buy table entries all have a 5-year guarantee.

for someone currently aged 60

OP is planning to retire at 60. Yes annuity rates might have changed by then, but the current CETV of his pension should be somewhat related to the cost of providing the pension when he gets there?

gm0

OP. Something to be quite conscious of in your planning for the DB vs DC elements

Is making sure you understand and properly allow for the value of the inflation indexation element of the projected DB pensions. Both leading up to scheme normal retirement age and beyond into retirement itself.

it can seem intuitive - but a poor decision - to take 25% commenceent lump instead of guaranteed income with indexation out of a DB pension where a decent indexed (so wholly or partially inflation proofed) cash flow was thus foregone for the one off 25%. At the start.

This is a substantive and optional risk transfer into your own financial planning.

And while it MAY (and often has been) possible to take the cash so liberated, get it into a (currently) tax sheltered investment (S&S ISA) etc. And invest successfully achieving an indexed return or better.
It is also clearly a much more risky endeavour than just keeping an already well indexed income already on the table at no speculative risk to you. (Regulation and/or PPF 90% underpin etc.)

Which requires close attention to the schemes exact rules.

And reflection on your attitude to risk - or more usefully - taking a view based on overall portfolio

hugheskevi

https://forums.moneysavingexpert.com/discussion/comment/82100581#Comment_82100581

The element of a redundancy payment exceeding £30,000 counts as earnings that attract tax relief, by being classed as employment income, and so it is also relevant UK earnings.

Therefore, no employer involvement is required to get full tax relief, as long as there is sufficient Annual Allowance available (including carry-forward).

It may be helpful if the redundancy can be timed to be early in a tax year if there is scope for negotiation around exit dates. That better utilises Personal Allowance and basic rate tax band so as to reduce the amount that might go into a pension, and hence requires less carry-forward than if redundancy is paid close to the end of the tax year and allowances have already been largely used by regular salary.

dunstonh

duplicate thread: https://forums.moneysavingexpert.com/discussion/6679563/pension-overwhelmed/p2

patsy2090

At 60 I was only planning on drawing final salary pension as income with tax free element which I would invest and spend. I am not looking to sell it or transfer it. It is protected and will go up to a maximum of 7% there is a clause that states protected and will not go below current value.

I am not touching my dc pensions at 60. And will not touch until I stop earning.

I was told that I could take 30k redundancy and have co transfer the remainder of 65k into my current pension, I have allowances from past years. My employer puts in 9% roughly 6k and with my new contribution and match from them it is roughly another 14% so still not near the 60k and I would use balance from previous annual allowance.

I have had ill health in past and am in demanding job which will be phased out so I want to have a work life balance, we should have 3k per month without using any of the money we have and that would give us a comfortable living and can take money from the tax free element when required.

patsy2090

https://forums.moneysavingexpert.com/discussion/comment/82100592#Comment_82100592

Yes double checked last quote was 2024 - 14k without tax free

QrizB

last quote was 2024

It could have changed quite a bit since then.