Final salary pension (Confused)

calender8

Please can you give advise on which option of my BT pension I should take. I will receive my pension in may 08 when I am 60 but will carry on working for 2 years.

1a Tax free lump sum £33572.31 pension £11190.77

1b Tax free lump sum £63046.58 pension £9456.98
Pension is index linked to rpi
I will also receive 10300 bt shares in August 08

If I save my pension for 2 years and sell my shares and put this altogether with one of the lump sums I then hope to invest to bring in an income.

If I take 1a I will have in 2 years together with bt shares and pension 70k and if I take 1b I will have £100k to invest for an income.

My wife is 50 and plans to work for a further 3 years and then hopes to go part time.

NAR

If your wife's earnings and £9457 are enough for you to live on then take 1b, otherwise 1a.
Better the money in your hand to make use of while you are in good health to enjoy it. Who knows how long any of us will live?

cyclonebri1

NAR wrote: »

If your wife's earnings and £9457 are enough for you to live on then take 1b, otherwise 1a.
Better the money in your hand to make use of while you are in good health to enjoy it. Who knows how long any of us will live?

Never a truer word.

Make a descision. Then at worst, regret the things you have done, rather than those you haven't, who said that??

jennifernil

When my husband retired recently he took the max lump sum possible. Some we spent on repaying the last little bit of the mortgage, some on a new car and caravan, the rest is in the best accounts I can find.

Him taking this does not affect the widow's pension, so that was also a consideration. Plus, as said above, we can enjoy it while we are still young enough. If we run short we can sell the house!

nearleyretired

I am in a similar situation to this - can anyone tell me if I can 'give' all of my lump sum to my wife to put into a savings account? Or are there limits to the amount that I can 'give' her.

The reasoning behind this is that she does not earn enough to pay tax.

I am trying to balance a combination of this and doing my own drawdown against
the 5% (tax paid) offered by an IFA.

Doing a spreadsheet comparing taking a lump sum and "the 5% (tax paid) offered by an IFA" and just taking the pension shows less per annum for the lump sum method. I am favouring a drawdown of my own i.e. drawing more money than the interest.

Any thoughts?

jennifernil

There is no problem "giving " it all to your wife, other than that she may run off with it all!!!

This is the position we are in. I have no earned income, so all our savings are in my name, so we pay no tax on them at the moment.

If your wife has earnings the interest on savings will be added to this so may take her into tax, but it is still worthwhile ensuring you use all her allowance.

At present my husband gets an extra 60% on his basic state pension for me, but once I am 60 it will become my pension, so that will affect my tax position slightly.

We are stashing as much as possible in ISAs to keep the tax down. You could also consider an "investment" in Premium Bonds as winnings are tax free.