Redundancy at 52, retire now?
Comments
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Stop fretting - you are absolutely laughing as regards being able to retire now.
I would strongly recommend leaving the DBs until normal retirement age to give you a solid, guaranteed income.
If you start at state pension age and work backwards you see:
- Income at 66 = £1,600 DB1 + £22k DB2 + £8,500 SP = £32k pre tax / £28k post tax.
- To have £28k pa spending from now until then assuming DB1 taken immediately and DB2 @ 65 would cost about £350k in total including paying voluntary NICs to get the full SP.
-You have £480k outside pensions and £100k inside (all of which you could get out tax free)
You therefore have not £18k pa but £28k pa absolutely nailed on. What you should be asking is what to do with your spare £230k?0 -
Yes, I've seen it discussed here before. Ordinary BTL rents are not earnings for pension purposes, holiday home rents are. (I suppose the reason is the amount of work that has to be put into a holiday home, especially the regular cleaning and laundry.)
So taking BTL out of the equation, that just leaves my employment income. Would it be correct to say that if I wait until I get my P45 in Sept the total amount I can contribute to a pension this year will be the total taxable pay (max 40K). So after Sept I take my P45 taxable gross, deduct the employee and employer contributions already made, and what is left is the lump sum I can pay into the fund?
For the carry forward I do the same calculation using my P60 taxable gross for the last 3 tax years?0 -
You can calculate the lower of a) your taxable income as bolded above; or b) your annual allowance plus carry forward. In your case a is going to be lower than b so that will be your limit.So taking BTL out of the equation, that just leaves my employment income. Would it be correct to say that if I wait until I get my P45 in Sept the total amount I can contribute to a pension this year will be the total taxable pay (max 40K). So after Sept I take my P45 taxable gross, deduct the employee and employer contributions already made, and what is left is the lump sum I can pay into the fund?
For the carry forward I do the same calculation using my P60 taxable gross for the last 3 tax years?0 -
I don't think any of the responses have mentioned it - have you a will or are you leaving it all to the taxman?Never pay on an estimated bill0
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To calculate the available carry-forward from the previous three years use 3 * 40k - gross pension contributions from you and employer. If you need more, there may be some from 2015 using its extra rules. HMRC has a calculator for this.Would it be correct to say that if I wait until I get my P45 in Sept the total amount I can contribute to a pension this year will be the total taxable pay (max 40K). So after Sept I take my P45 taxable gross, deduct the employee and employer contributions already made, and what is left is the lump sum I can pay into the fund?
For the carry forward I do the same calculation using my P60 taxable gross for the last 3 tax years?
For the pay, the total gross amount that can go into the pension this tax year is P45 gross pay plus gross employer contributions already made.
Then compare that to this year's allowance plus carry-forward and if that's higher you can use the pay calculation as your limit.
It isn't a big deal if you put in more than the pay limit. You just tell the pension company and they pay you a "refund of excess contributions lump sum". Going over the annual allowance plus carry forward is more hassle because of the annual allowance charge that you'd have to pay HMRC instead, which is calculated to get them back the tax relief, while the money stays in the pension. You don't need to tell HMRC that you have used carry-forward.0 -
For the pay, the total gross amount that can go into the pension this tax year is P45 gross pay plus gross employer contributions already made.
Thanks's the penny has finally dropped for me on the carry-forward and I suspect I simply won't earn enough this tax year to make use of it. I do though need to make full use of what I can contribute in the current tax year. My contributions are currently 10% employee and 12% employer. My own contribution is through salary sacrifice. Does salary sacrifice make a difference at all?0 -
Salary sacrifice contributions come from the employer. You can pay in on top of that a gross amount equal to your gross after sacrifice pay.
Assuming annual allowance is available.
If your employer is willing, increasing the sacrifice to take your pay down to minimum wage will save you useful NI as well, that makes it cheaper than you doing it yourself.0 -
About what to invest in: here's a good piece that, among other things, warns against investing in bonds at current yields (and also contains a fine rant against official views of risk).
https://www.johnkay.com/2018/01/22/risk-retail-investor-disastrous-new-rules/
If you find him persuasive then you might decide that your best bond-like investment might be to defer DB2 until the scheme's normal retirement age.
The problem of the moment is that return-seeking investments - equities - are highly priced, especially in the US, while risk-mitigating investments - e.g. bonds - give rotten returns and are thereby possibly not going to defend you from financial risks anyway.
It's the dreaded ZIRP at work - the zero interest rate policy pursued by so many central banks/governments. It may be that investors are looking at quite a few years of dismal returns. Or maybe not - nobody knows.Free the dunston one next time too.0 -
Don't forget you still tax tax relief on any additional contributions you make even when it takes your total income below the income tax threshold thus you get relief for tax you never even paid in the first placeSalary sacrifice contributions come from the employer. You can pay in on top of that a gross amount equal to your gross after sacrifice pay.
Assuming annual allowance is available.
If your employer is willing, increasing the sacrifice to take your pay down to minimum wage will save you useful NI as well, that makes it cheaper than you doing it yourself.
I think....0 -
Don't forget you still tax tax relief on any additional contributions you make even when it takes your total income below the income tax threshold thus you get relief for tax you never even paid in the first place
So the optimum solution (could be too late to achieve now) is to salary sacrifice down to the point where your remaining taxable earnings for the part year you are working just come to the personal allowance. (If you went below that, you wouldn't be getting tax relief on the last bit.) You then contribute those remaining earnings to a SIPP / PP to get tax relief on them too. Simples!0
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