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    • Ostrich49
    • By Ostrich49 22nd Aug 19, 2:57 PM
    • 3Posts
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    Ostrich49
    No retirement income - advice
    • #1
    • 22nd Aug 19, 2:57 PM
    No retirement income - advice 22nd Aug 19 at 2:57 PM
    Hello fellow Forum members
    Wondering if anyone can help.
    First a bit about my situation:
    I failed to prepare for my retirement and now- aged 70 - have only a partial State Pension. I currently earn a modest income from self employment and imagine, barring accident or ill health, I will have to work for the forseeable future. So, my queries are:
    1. As I am currently earning enough to be meet my everyday needs I have been wondering whether I should invest what little State Pension I receive - around £300/m - into a SIPP? Rather late in the day I know. If I did this would I receive tax relief on this? And does anyone have any advice on what would be the best product for me? Alternatively would it be better to buy an ISA?
    2. I recently learnt I have a very small pension from a pension mortgage I took out with Standard Life in my 30s. This only amounts to £3000 so a drop in the ocean. However I am wondering if I should top this up by paying in the £300/m to my SL account which is open until I am 78. this would be the easiest option but is it the most sensible? Or again would it be better to buy an ISA?
    I welcome any thoughts and thank you in advance.
Page 1
    • LHW99
    • By LHW99 22nd Aug 19, 3:31 PM
    • 2,136 Posts
    • 1,974 Thanks
    LHW99
    • #2
    • 22nd Aug 19, 3:31 PM
    • #2
    • 22nd Aug 19, 3:31 PM
    If you had a state pension age of 65 then its just possible you could pay for a couple of missing years to increase the amount you have coming in in state pension - the DWP phone line is very helpful. Also, you could defer your state pension payments while you are still working and have enough. As you would have reached SPA before 2016, deferring it by one year should increase it by ~10% - better than even getting tax relief, and it would be index linked.
    • Ostrich49
    • By Ostrich49 22nd Aug 19, 5:12 PM
    • 3 Posts
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    Ostrich49
    • #3
    • 22nd Aug 19, 5:12 PM
    • #3
    • 22nd Aug 19, 5:12 PM
    Hi LHW99
    Thanks for your reply. I already deferred for two years before I started to draw my SP (at 62 my retirement age was 60). I don't think I can reverse that now I have been already been drawing it for eight years. Also I did investigate paying for missing years but there were about 10 and it came to too much at the time and I think too late to do this now.
    • xylophone
    • By xylophone 22nd Aug 19, 5:41 PM
    • 31,013 Posts
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    xylophone
    • #4
    • 22nd Aug 19, 5:41 PM
    • #4
    • 22nd Aug 19, 5:41 PM
    I don't think I can reverse that now I have been already been drawing it for eight years.
    Yes, you can, just once more.

    See https://www.thisismoney.co.uk/money/pensions/article-6515783/Can-stop-state-pension-payments-started.html
    • zagfles
    • By zagfles 22nd Aug 19, 5:45 PM
    • 14,478 Posts
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    zagfles
    • #5
    • 22nd Aug 19, 5:45 PM
    • #5
    • 22nd Aug 19, 5:45 PM
    Look into Pension Credit also.


    https://www.gov.uk/pension-credit
    • PasturesNew
    • By PasturesNew 22nd Aug 19, 5:48 PM
    • 67,088 Posts
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    PasturesNew
    • #6
    • 22nd Aug 19, 5:48 PM
    • #6
    • 22nd Aug 19, 5:48 PM
    If you're single/live alone, then if the State Pension is the only income you have you won't meet the minimum income threshold - and they top it up to about double.

    In short, if you are single/live alone and your total income is under about £150/160 per week or so there's probably a top up to be found.

    Also: Council tax can be claimed.
    Also: If you rent, you can get that too.
    • bluenose1
    • By bluenose1 22nd Aug 19, 8:06 PM
    • 2,167 Posts
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    bluenose1
    • #7
    • 22nd Aug 19, 8:06 PM
    • #7
    • 22nd Aug 19, 8:06 PM
    As you are over state pension age you may be eligible to claim Pension Credit which tops up your total weekly income to £167.25.
    I assume your current self employed income plus your state pension income takes you over this amount. However if for whatever reason you don't earn this amount you should consider claiming pension credit.
    You may also be entitled to help with Council Tax etc if your income is low.

    I suppose whether to put into a SIPP etc may depend on when you intend to cease self employment and what your self employment annual income is.
    I think withdrawing income from a SIPP would reduce any potential Pension Credit entitlement by the corresponding amount, so you would be no better off when withdrawing.

    My dad was a self employed builder who had never factored in retirement. Pension Credit was a great boost to his income.
    Money SPENDING Expert

    • Ostrich49
    • By Ostrich49 23rd Aug 19, 11:55 AM
    • 3 Posts
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    Ostrich49
    • #8
    • 23rd Aug 19, 11:55 AM
    No retirement income - advice
    • #8
    • 23rd Aug 19, 11:55 AM
    Thank you to all who replied. Most helpful. Useful to know that I could take second deferral of SP, also info on Pension Credit. I live with one of my offspring who pays me around £350 Ďrentí. Think this might scupper any changes of claiming PC.
    Did anyone have any thoughts on second part of my query re what to do with the £3000 Standard Life pension pot. Should I start paying into this again? I havenít paid anything since 1992 but it is still open for a xtra contributions until I am 78. Or would it be better to withdraw and buy an ISA.
    • LHW99
    • By LHW99 23rd Aug 19, 12:21 PM
    • 2,136 Posts
    • 1,974 Thanks
    LHW99
    • #9
    • 23rd Aug 19, 12:21 PM
    • #9
    • 23rd Aug 19, 12:21 PM
    If you make payments into a pension you would get a refund of tax added, which would be be better than interest on a cash ISA. I am surprised you can pay in until 78,as I thought you couldn't add to a pension after 75, but someone more knowledgable than me would confirm that.
    • DairyQueen
    • By DairyQueen 23rd Aug 19, 3:04 PM
    • 879 Posts
    • 1,617 Thanks
    DairyQueen
    Did anyone have any thoughts on second part of my query re what to do with the £3000 Standard Life pension pot. Should I start paying into this again? I havenít paid anything since 1992 but it is still open for a xtra contributions until I am 78. Or would it be better to withdraw and buy an ISA.
    Originally posted by Ostrich49
    The problem with legacy DC schemes of this vintage is that the charges are often incredibly high. Do you know how much SL are charging you? There are likely to be fund charges on top of the management charge. Has the performance been poor? If so, that's one indication that the charges are high.

    How much longer do you think you will leave the pension invested? i.e. will you need to draw on it when you give up P/T work? The timescale for the investment will indicate the type of investments that are suitable. If you think you may draw on the pot in <5 years then you are best served holding in cash. I believe that you may be able to use the 'small pots rule' to access the entire £3k in one hit and, perhaps, invest in a savings bond. Interest rates on cash held within a pension wrapper are notoriously low.

    However, watch the income tax situation as the last thing you need is to pay income tax on any withdrawal.

    Another option is to transfer the SL pension to another provider/platform. This would be a no-brainer if SL charges are high. You could then add additional contributions to the new scheme.

    Transferring is easy. It seldom takes more than two weeks and sometimes under a week.

    Assuming that you will wish to access the funds in <5 years then consider opening a SIPP with a provider that doesn't charge for holding cash. You can then make contributions to the SIPP, receive the 25% tax uplift, and leave the funds in cash. Some SIPP providers pay a nominal amount of interest but it's pretty pathetic.

    HL is worth considering for a cash-only SIPP. They don't charge for holding cash, pay paltry interest, and don't charge for drawdown. They are, however, one of the most expensive platforms for other types of investments. There are plenty of SIPP providers to choose from but you need to check out their charges against the type of investments you will hold before deciding the best option for you.
    • bluenose1
    • By bluenose1 23rd Aug 19, 7:34 PM
    • 2,167 Posts
    • 3,561 Thanks
    bluenose1
    Thank you to all who replied. Most helpful. Useful to know that I could take second deferral of SP, also info on Pension Credit. I live with one of my offspring who pays me around £350 Ďrentí. Think this might scupper any changes of claiming PC.
    Originally posted by Ostrich49
    I assume you own or rent the house which your offspring pays you the £350 rent to live in? If so I don't think this would affect PC entitlement as they are a relative.
    Money SPENDING Expert

    • Brynsam
    • By Brynsam 23rd Aug 19, 8:22 PM
    • 2,228 Posts
    • 1,686 Thanks
    Brynsam
    If you make payments into a pension you would get a refund of tax added, which would be be better than interest on a cash ISA. I am surprised you can pay in until 78,as I thought you couldn't add to a pension after 75, but someone more knowledgable than me would confirm that.
    Originally posted by LHW99
    Personal contributions don't attract tax relief after age 75. Employer contributions remain eligible for corporation tax relief and aren't a taxable benefit in kind.

    I wonder if OP had some sort of occupational arrangement, given it was taken out before personal pensions came into being in 1988 (doing the sums that looks likely). Alternative would be a Retirement Annuity Contract (aka a S226 contract). OP, any idea...?
    • ffacoffipawb
    • By ffacoffipawb 23rd Aug 19, 8:47 PM
    • 2,873 Posts
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    ffacoffipawb
    Personal contributions don't attract tax relief after age 75. Employer contributions remain eligible for corporation tax relief and aren't a taxable benefit in kind.
    Originally posted by Brynsam
    If you sal sac into pension after age 75 you would get the tax relief that way, by reducing income and thus not paying tax on it?
    Retired: Financial Independence achieved in June 2019.

    Cofiwch Dryweryn
    • pearl123
    • By pearl123 23rd Aug 19, 9:03 PM
    • 1,523 Posts
    • 2,209 Thanks
    pearl123
    Hi LHW99
    I did investigate paying for missing years but there were about 10 and it came to too much at the time and I think too late to do this now.
    Originally posted by Ostrich49
    Check to see if there is still time to pay any missing years, You donít have to pay all the missing years. I just picked a few to pay to top it up.
    • nigelbb
    • By nigelbb 24th Aug 19, 5:04 AM
    • 2,604 Posts
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    nigelbb
    Check to see if there is still time to pay any missing years, You donít have to pay all the missing years. I just picked a few to pay to top it up.
    Originally posted by pearl123
    +1

    Just check your NI contribution record online & see if there are any years you can still pay for I think that you can go back at least ten years.

    https://www.gov.uk/check-national-insurance-record
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