playing the system-savingsVbenefits.

meester

gerry257 wrote: »

thankyou all for your thoughts and replies re legally hiding £40000. I`ve phoned my pension dept. and have asked for a reduced lumpsum increasing my pension payouts. This will be the first time for me to be out of work and it has surprised me how much you can claim in various tax benefits, especially with two children still dependant. It was my initial intention to divide the 40000 lumpsum into 10 years of £4000year and add to that my pension payout. To me that would still maintain my pride and dignity. But when you do the sums and see what you get in return for having no finances you tend to loose your pride and think "if you can`t beat them join them". I must admit that it leaves me with the same opinion that if someone has put money aside for whatever reason and gone without during life then they deserve the same as the less frugal. Frustrating, but I can`t see it changing. any views will be welcomed

You are 100% correct.

You have a duty to yourself to obtain the best possible financial position you can. If that means claiming benefits, so be it. It's pointless moralising about it, when over half the country is in receipt of means-tested benefits. The government has created the biggest welfare state it can, and you need to live in the reality of the modern world.

With two dependent children, the available benefits can reach about £20k pa.

Your best bet is going to be look at all the various benefits that are available, and look at withdrawal levels and so on. You seem to imply that you don't actually have to claim any pension at all. So it might be worth deferring it.

Unfortunately I can't advise on what deprivation of capital is, but for tax credits at least, your capital is not taken into account.

Have a look at these:

http://www.hmrc.gov.uk/rates/taxcredits.htm

Be aware of the working credits. It might be worth registering as self-employed, and taking a hobby-type job. As long as you work 16 hours, you get these. So if you spend 16 hours making things and selling them on ebay (the 16 hours would be your total time spent on the business), you are eligible. It doesn't have to be an arduous job at all.

There are an incredible array of other benefits out there, including council tax benefit and housing benefit, which can amount to thousands of pounds a year. These are quickly withdrawn from you if your income rises, so you really need to spend quite a long time reading the official documents working out how to structure (legally) your finances to get them.

You could quite possibly be eligible for disability benefits as well.

My guess would be that it would not make sense to claim any pension until your children reach 19 (providing they are still in full-time education). You may get an improved pension if you defer, which makes sense if you are getting thousands in benefits in the mean time, and your state entitlement will also improve.

meester

margaretclare wrote: »

You may have a long time to live after your 'early' retirement. It might be possible for you to put that £40K straight into another pension fund e.g. a SIPP. Money in a pension fund is not counted for many benefits and is not counted in the event of e.g. bankruptcy. Anyone can put money into a pension fund up to age 75 and the taxman adds basic rate to it, 20% from April.

You only get tax relief on payments up to your annual income, or £3,800 whichever is higher.

He can of course 'unretire', at a later date.

IWasWondering...

EdInvestor wrote: »

Check the rules on that. Beyond a certain age (IIRC) this is not allowed either, you must claim pensions you are entitled to, not "save it up for a rainy day" at the taxpayers' expense. .

To clarify.
This is a final salary scheme from work that I have been paying into for 18 years so I do not think, by not taking it early, I will be doing anything "at the taxpayers expense". If I take it early I would lose 3% per year (a total of 39%) as opposed to taking it on retirement (my rainy day). Not that I expect it to be a huge amount anyway.
But I will be (as you so rightly advise) checking the rules/my options with my pension scheme.
PS: Not sure what you meant by "beyond a certain age". I am only 51!

EdInvestor

IWasWondering... wrote: »

To clarify.
This is a final salary scheme from work that I have been paying into for 18 years so I do not think, by not taking it early, I will be doing anything "at the taxpayers expense". If I take it early I would lose 3% per year (a total of 39%) as opposed to taking it on retirement (my rainy day).

You aren't required to start taking pensions before NRD if it would cause loss. But questions will be asked if you claim pension credit at age 60 about whether you have accessible alternative pension income.

IWasWondering...

Hi margaretclare and EdInvestor,
Thanks to you both for your advice.
I shall have a better idea of options available when I have spoken to the pensions advisor for my scheme. At the moment my preference would be to leave it where it is and take it on retirement but I will make that decision when I am able to make a more informed decision (if you know what I mean?). Thanks again.