Am I doing this right?

atush · 13 August 2018 at 6:21PM

Rodders2409 wrote: »

Hi....any takers...all help will be loudly applauded by me.. ;-)

No applause required, just use the Thanks button?

Rodders2409 · 15 August 2018 at 11:13AM

Sorry for the delayed response Judwin,

Here are some responses to your questions below...

1) How old is your wife? She must be at least 55 before she can withdraw the £2880/3600 and give it to you. Same for the £27K with the Pru.

Yes older than 55

2) How many years NI does your wife have towards her state pension? Less than 10 and she won't get one. If she has 35 then she should be able to get the full new State Pension. The Maximum SP is about £8.5K p/a.

She has almost gained the maxiumum and after talking with the Pensions Office it transpires that it's not worth making any further top up contributions.

3) Your wife has/will have a tax free income amount of about £11.5K p/a in retirement. Assuming she will qualify for the full SP, then she will have about £3K of tax free allowance remaining. To draw £3K from a person pension, you probably need a pot approaching £100K. She currently has a pot of £27K + £3.6K, so a bit more than £30K.

OK

From what you've written I'd be more inclined to be leaving your wifes pensions alone (in her name), and keep paying in the 2880/3600 to boost her income in retirement

OK ....but I had understood that there were tax benefits in transfering to my Pension to gain greater relief, but if it's very marginal gains but hassle then I'm not looking for work!?

If we do the annual £2880 payment, is that better into a H&L SIPP as we are doing, and then take out 90% to invest into either the existing PRU pension or maybe a new Stakeholder pension as previously mentioned?

Rodders2409 · 15 August 2018 at 12:35PM

Many thanks Triumph & Xylophone & sorry for the delayed response..

So, I hadn't posted a follow up to previous detail suggesting that we were getting married, well looked like I was too optimistic, as she turned me down

...!
Don't worry, it wasn't a big shock and I did it all ever so well with a ring and everything

...its a long story, but will probably end up happening at some point just not this year.

The result being that the property income will still sit with me, and I'll need to manage that through the SA system as before.

Having read you last posts...surprise...surprise...I have a few questions.

Your wife ( you are now married as you previously indicated?) is now around 58 and does not have any relevant earnings?
Correct

Have you both obtained State Pension Statements?
Yes - I have full contributions and Jane has most but advised by Pensions dept that it's not worth financially adding any more to hers.

https://www.gov.uk/check-state-pension

You mentioned before that your OH has been diagnosed with a progressive illness - presumably you have looked into any benefits to which she may be entitled?
There are no specific benefits to Parkinsons at the moment, and assessments are getting harder apparently

It would be possible for Pru pension to be transferred into your wife's SIPP.
Yes they said its OK to transfer

They require a certain amount of cash to be left in the SIPP to keep it open.
Understood, but what I can't quite grasp is, is it better to use the SIPP as a mechanism to gain the £720 and then take out £3510 (90%), with 25% (£877) tax free, and because she isn't using any of her P/Allowance we get the balance (£2633) tax free too. And then put that into another SIPP, Stakeholder pension, my pension?.....

Or is it simply better to just keep adding £2880 every year to the original SIPP and gain the £720 every year, because the gains made by moving monies around are limited compared to the management time involved?

Once a SIPP is crystallised she simply needs to advise them in the following tax year that she wishes to make a fresh contribution - it is then possible to take another 25% PCLS with the balance taxed as income in the year of receipt.

If your wife transferred the Pru pension to the SIPP, she would be able to draw 25% of the whole tax free and then draw as much of the remainder as kept her tax free (after taking into account the rental income) for the current year.

OK...meaning that her SIPP this year would be approx £27K + £3600 (no rental income ) plus an additional £2880 and £720 for 2018/19.....is that correct.

Then we could take out 25% (£8550) tax free plus £3,300 tax free which keeps her under her PAllowance...is that correct?

The question remains, where is it best to put that money I guess? (plu

kidmugsy · 15 August 2018 at 1:11PM

Rodders2409 wrote: »

Because my better half has a smallish Prudential pension (approx £27,000)

Plus she has £3,600 in a SIPP at HL. Plus you are inclined to contribute a further £3600 gross to the HL SIPP (=£2,880 net). Correct?

So you transfer the Pru pension to the SIPP. (Dead easy, in my experience.) Therefore in a few weeks she'll have about £34,200 at HL. (She might be very wise to hold it as cash rather than investing it.)

She can therefore take about £8,550 as TFLS. She can also take up to a further £11,850 (= Personal Allowance) as taxable drawdown - but it will be taxed at 0% (unless she has income you've not told us about). Now you can use some of this money to run through your own pension. Hurray!

Then in 19/20 she will presumably contribute another £3,600 gross and withdraw £900 TFLS plus up to another personal allowance's worth. Repeat until she turns 75.

James145 · 15 August 2018 at 2:02PM

kidmugsy wrote: »

She can also take up to a further £11,850 (= Personal Allowance) as taxable drawdown - but it will be taxed at 0% (unless she has income you've not told us about.

I'd speak to HL before taking the taxable payment, as they probably don't have her correct tax code yet so if she takes the £11,850 before they have the correct tax code she'll probably end up paying tax of £2,172.50. She'd then have to claim this back from HMRC, which is a longer process than taking a small payment initially so HL get the correct tax code.

xylophone · 15 August 2018 at 3:54PM

Has your wife seen this?

https://www.parkinsons.org.uk/information-and-support/personal-independence-payment

Rodders2409 · 15 August 2018 at 5:34PM

Hello...many thanks...perfectly clear and understood.... I think!

For simplicity, is it worth me not following the Stakeholder pension route for now as was mentioned in a previous post? ....At the moment I have my head straight on your post kidmugsy.

BUT...dhooo.. just realised that part of my rush to maximise my pension contributions in the past 12 months led me to utilising the maximum amount i can pay into the my pension (40K), I am also utilising some of my 3 years untapped allowance before that. So am I correct in thinking that all I need to do is transfer the monies into my pension a single payment at HMRC won't need to be told?....because it sorts itself out?

crv1963 · 15 August 2018 at 6:23PM

Personal Independence Payment should be available, it's not taken into account for income tax as far as I am aware, it is intended to help someone better able to manage, nor is there an earnings limit/ means testing.

If she applies for it do seek help in completing the form- it looks relatively easy but many over estimate their abilities and under estimate the impact on their lives of their illness. Copies of Out Patient/ Doctors letters, reports/ letters detailing impact of illness from professionals involved help support applications. The point is to promote independence of the individual, but sometimes applying is like banging your head against a brick wall.

Rodders2409 · 15 August 2018 at 8:53PM

Hi crv and xylophone

Many thanks for looking at this and basically being interested ..!

J isn't quite at the point where PIP is needed yet, and we've been advised by the local support groups of the pitfalls in and benefits in completing the process.

It's certainly something that will be on the radar in the future and something we will need to assess well before she gets to 65.

To be blunt about it, we are looking to get ourselves into a physical position where the house & and life's infrastructure is in as good a position as we can get it , and want drop out of the 9-5 to make the best of the time we have whilst J is some what physically able. That may be 5..10..15 years...who knows, but we don't want to use "in hindsight"...

Again, many thanks.

Am I doing this right?

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