How long does she need to live? Oh which scenario! :-)

dunstonh

Retired_I.F.A. wrote: »

I'll ditto Dunstonh 100% IFA B is a cowboy.

Glad you popped in btw, did you get my pm asking you to comment or have you just clocked the thread?

I got the PM asking me to comment but I was avoiding the thread a bit as it was very specific and I was concerned over compliance. There are so many variables on this one that it could swing about from option to option so I was reading but waiting.

Ignoring the cost implications, which I realised were significant, its the variations in the planning strategy's that caused me the greatest concern.

You can often tell though by looking at the cost. Unfortunatly, with most of the old tied salesforces closing down, a good number of those became IFAs. The step up from tied to IFA is big. I would say almost as big if not bigger than going from nothing to getting FPC3 qualified and becoming a tied agent. Those that took time to learn are fine but there are a good number who have carried on acting like tied agents but under the IFA moniker. It is something that the FSA is aware of and there are proposals under consultation to take effect in 2009 to address this by forcing IFAs to have higher qualifications than tied agents and downgrading the tied agent role so there is a clear difference.

EdInvestor

benny5 wrote: »

If we can park the other issues for now and concentrate solely on the 'cash for pension' exchange.It becomes more confusing all the time.

Hello benny


Have you looked at things from the tax angle?This sometimes serves to clear away confusion.

Pension/annuity income (including state pension) is taxable.Income from ISAs is not, and income from direct investments may not be.

As of 2011 everyone over 65 will have a tax free age allowance of 10k.pa. It's rising rapidly now from around 7k to that level. The state pension will eat up some of that of course.

The next important number is 21k.If your income is between around 21k and 26k , then your age allowance is clawed back to the normal personal allowance at a very high tax rate.

I don't believe you've told us how much the basic pension without commutation plus AVC + state pension will add up to, but if it is in the 21-26k range then this would be an argument for commuting more pension to cash.Obviously the same principle applies to staying out of the high rate band.

It's important for spouses to try to use up their individual allowances: often you find the wife's is wasted (low pension income) and the husband is overpaying tax (too much money in pensions). Using spare money for a bit of balancing could be a good idea.

benny5

EdInvestor wrote: »

Hello benny


Have you looked at things from the tax angle?This sometimes serves to clear away confusion.

Pension/annuity income (including state pension) is taxable.Income from ISAs is not, and income from direct investments may not be.

As of 2011 everyone over 65 will have a tax free age allowance of 10k.pa. It's rising rapidly now from around 7k to that level. The state pension will eat up some of that of course.

The next important number is 21k.If your income is between around 21k and 26k , then your age allowance is clawed back to the normal personal allowance at a very high tax rate.

I don't believe you've told us how much the basic pension without commutation plus AVC + state pension will add up to, but if it is in the 21-26k range then this would be an argument for commuting more pension to cash.Obviously the same principle applies to staying out of the high rate band.

It's important for spouses to try to use up their individual allowances: often you find the wife's is wasted (low pension income) and the husband is overpaying tax (too much money in pensions). Using spare money for a bit of balancing could be a good idea.

Thanks ED for the reminder.

There are times when your can get so engrossed in figures and miss the obvious. As things stand and assuming 3% increases across the board, if I opt for the maximum cash on the main pension and AVC's I will be just under the £21K at 65. By maximizing both tax allounces I anticipate having most of the cash in a tax free situation by then. Always assuming Mr Darling doesn't spoil my plans.

Regards

Benny.