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  • FIRST POST
    • greent
    • By greent 15th Apr 18, 4:05 PM
    • 6,913Posts
    • 70,742Thanks
    greent
    I'm Confused by this Pension Malarkey.....
    • #1
    • 15th Apr 18, 4:05 PM
    I'm Confused by this Pension Malarkey..... 15th Apr 18 at 4:05 PM
    Please be gentle! I'm confused as to options with pensions. And also as to ensuring bases are covered.

    Background:
    OH and I are both 48. Own our house, no mtge, value c425k (400k if being conservative) BTL value conservative 100k, IO mtge 62k. BTL income after all costs (but before tax) c. £4500 (we are now repaying this on an adhoc basis) Easy to let property - popular area and good size.
    We have 4 children (20, 18, 12, (almost)9) - eldest at uni, 2nd looking to go in Sept.
    OH is a contractor and we both take minimal salary from his company - each equivalent to income tax free allowance and dividends of varying amounts each year (usually low, no more than 5k each, and then we'll have a 'big' year) I also have a small income from invigilating (c 2.5k pa)

    Pensions:
    We both used to work for banks.
    OH has a DB scheme with a current tfr value of £650k. Current pension value would be just under 21k pa. Option to take 105k tax free at 60 and have reduced pension 15k pa.
    Mine - current tfr value 250k with an annual pension of 6.8k pa.
    These have pensions for each of the children if something should happen, payable until the child is 23.

    We also have some smaller pensions - I have a tiny AVC (value <1k and a very small local govt pension (c. £180 pa) and OH has an Aviva pension with a current fund value of about 25k. We have been doing a NEST pension through his co for a year, but as we don't earn much we haven't put much in between us and the co in the past 12 months (each pension has a current value of just over £500) From this month contributions are 15% employer and 10% us/ employee.

    Up to date state pension forecasts show full for me and about £1/ mth less than full for OH.


    We've had a meeting with an IFA who just talked about transferring the DB pensions without any detail as to what happens to them if transferred - I had to ask. I'm looking at setting up a meeting with a different one, but would like to be more 'armed' with questions and knowledge beforehand. I'm not necessarily looking at transferring them (I come out at a risk attitude of 5, OH 6) because of the children.
    Actual currently held cash savings/ liquid investments are relatively low - c 15k. All easy access at the mo. Considering S&S ISA.

    I'm just wondering really about anything and everything. Frankly, I am embarrassingly clueless about pensions Basic guidelines to consider and think about would be really good, please...... We're looking at retiring at 60- youngest would be 21 then.
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early (orig 11/25) 01/09 £124616 01/10 £104927 01/11 £89873 01/12 £76317 01/13 £52546 01/14 £35356 01/15 £12133 07/15 £NIL
    BTL Mtge 12/16 £69786. 2018 OPs (#18) £577.06/£4000
    Net sales 2018 £362.51/£1000 PAYDOX18 (#15) £12808.40/£18694.38
Page 1
    • Happier Me
    • By Happier Me 15th Apr 18, 4:35 PM
    • 425 Posts
    • 920 Thanks
    Happier Me
    • #2
    • 15th Apr 18, 4:35 PM
    • #2
    • 15th Apr 18, 4:35 PM
    A couple of questions immediately spring to mind:
    • You state the value of your DB schemes but not the age at which they are payable from. So at what age can you access your DB schemes without acturial reduction? And what are they worth at the age of 60, the age you want to retire?
    • To work out your gap in pension savings you need to know 'your number'. This is the amount of pension income you need to fund the lifestyle you want in retirement. You may also want to think about whether you require a lump sum, to replace the car, the kitchen and/orfund a once in a lifetime holiday etc etc.

    You may find, once you've calculated your number that your 2 X DB schemes plus rental income plus 2 X state pensions at SPA match or exceed your retirement income requirements.

    Personally I wouldn't trade the security of the DB schemes but I can see why some people would be tempted given the right circumstances and the large transfer values that may be on offer.

    Number thread here if you're interested: http://forums.moneysavingexpert.com/showthread.php?t=2146737
    • greent
    • By greent 15th Apr 18, 5:05 PM
    • 6,913 Posts
    • 70,742 Thanks
    greent
    • #3
    • 15th Apr 18, 5:05 PM
    • #3
    • 15th Apr 18, 5:05 PM
    A couple of questions immediately spring to mind:
    • You state the value of your DB schemes but not the age at which they are payable from. So at what age can you access your DB schemes without acturial reduction? And what are they worth at the age of 60, the age you want to retire?
    • To work out your gap in pension savings you need to know 'your number'. This is the amount of pension income you need to fund the lifestyle you want in retirement. You may also want to think about whether you require a lump sum, to replace the car, the kitchen and/orfund a once in a lifetime holiday etc etc.

    You may find, once you've calculated your number that your 2 X DB schemes plus rental income plus 2 X state pensions at SPA match or exceed your retirement income requirements.

    Personally I wouldn't trade the security of the DB schemes but I can see why some people would be tempted given the right circumstances and the large transfer values that may be on offer.

    Number thread here if you're interested: http://forums.moneysavingexpert.com/showthread.php?t=2146737
    Originally posted by Happier Me
    Apologies - the pension values of 21k & 6.8k pa are what we'd be getting if we were 60 now - so these will increase with the DB schemes. (So both are payable from 60 - I think we could access them before at lesser amounts but we don't plan on doing so)

    Our DB pensions aren't really *that* far off what we take in salaries and dividends now, so I see no problem in surviving on them (and we'd not have the costs of children - we currently have 3 at home and 1 at uni) Plus the BTL would be repaid by then (ideally I'd like to repay it in around 7-8 years) And we could go down to 1 car (and a smaller one at that as our main car - we currently run 2 cars, 1 of which is a 7 seater) When State pensions kick in we'd have even more income.


    We're unlikely to get any inheritances from parents (the small amount from my mum I've said to leave to the children) so won't acquire any future lump sums that way (not that we'll really need them as such - although we have dreams of a small place in Portugal..... )
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early (orig 11/25) 01/09 £124616 01/10 £104927 01/11 £89873 01/12 £76317 01/13 £52546 01/14 £35356 01/15 £12133 07/15 £NIL
    BTL Mtge 12/16 £69786. 2018 OPs (#18) £577.06/£4000
    Net sales 2018 £362.51/£1000 PAYDOX18 (#15) £12808.40/£18694.38
    • Dox
    • By Dox 15th Apr 18, 5:41 PM
    • 352 Posts
    • 199 Thanks
    Dox
    • #4
    • 15th Apr 18, 5:41 PM
    • #4
    • 15th Apr 18, 5:41 PM
    These have pensions for each of the children if something should happen, payable until the child is 23.
    Originally posted by greent
    It's worth checking exactly what the rules of the scheme say. Normally children's pensions are only payable to 23 while the 'child' is still in full time education or training - and it is for the trustees to decide what constitutes full time education or training (e.g. an apprenticeship might be considered 'full time training' even though they are earning). Children's pensions are sometimes payable after age 23 if the child has a long term disability or similar. The administrators of the scheme should be able to let you have the relevant extract from the rules - don't rely on the booklet or a benefit statement.

    A bit of basic reading might help you, too: https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics
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