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    • OldBlade
    • By OldBlade 9th Oct 18, 2:19 PM
    • 20Posts
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    OldBlade
    What best to do....
    • #1
    • 9th Oct 18, 2:19 PM
    What best to do.... 9th Oct 18 at 2:19 PM
    I am approaching retirement, 65 this year, but intend to defer my state pension and carry on working for bit.

    I have a couple of small pensions separately and I also have approx 80K made up of 2 SIPPs and a small pension I am contributing to.

    My wife also has a small pension but won't receive her state pension until 2022. She also has 80K in cash (savings and ISAs)

    I'm looking for suggestions for what we might do with this 160K in terms of the most productive investment.

    Many thanks for any ideas.
Page 1
    • xylophone
    • By xylophone 9th Oct 18, 2:40 PM
    • 26,923 Posts
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    xylophone
    • #2
    • 9th Oct 18, 2:40 PM
    • #2
    • 9th Oct 18, 2:40 PM
    You and your wife have both checked your state pension forecasts?

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

    I have a couple of small pensions separately and I also have approx 80K made up of 2 SIPPs and a small pension I am contributing to.
    Might it be worth considering consolidating your pensions into one plan?

    Have you considered an interview with Pension Wise for a discussion of your options?

    https://www.pensionwise.gov.uk/en

    Is your wife currently in receipt of a pension?

    Is she currently earning?
    • Mnd
    • By Mnd 9th Oct 18, 2:41 PM
    • 743 Posts
    • 910 Thanks
    Mnd
    • #3
    • 9th Oct 18, 2:41 PM
    • #3
    • 9th Oct 18, 2:41 PM
    Consider paying into a pension for your wife
    • OldBlade
    • By OldBlade 9th Oct 18, 2:56 PM
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    OldBlade
    • #4
    • 9th Oct 18, 2:56 PM
    • #4
    • 9th Oct 18, 2:56 PM
    Yes, we've checked our SP, I've got full and she has approx 90% or so.

    I have had an a moneywise interview and they offered the same, and very valid, suggestions as yourself.

    Combining my 3 pension pots is something I will end up doing, with a view to taking variable amounts from income drawdown, as and when required. My concern is that the pots themselves aren't gaining much and being eroded by charges.

    My wife's cash is of course not gaining much either and being eroded by inflation!
    • OldBlade
    • By OldBlade 9th Oct 18, 2:57 PM
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    OldBlade
    • #5
    • 9th Oct 18, 2:57 PM
    • #5
    • 9th Oct 18, 2:57 PM
    Paying into a pension for my wife? In what way?

    Sorry I don't understand.
    • xylophone
    • By xylophone 9th Oct 18, 3:05 PM
    • 26,923 Posts
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    xylophone
    • #6
    • 9th Oct 18, 3:05 PM
    • #6
    • 9th Oct 18, 3:05 PM
    My concern is that the pots themselves aren't gaining much and being eroded by charges.
    Cost comparison?

    https://forums.moneysavingexpert.com/showthread.php?t=5583030

    she has approx 90% or so.
    Is she no longer working or if working, not earning enough to pay NI or be credited with NI?

    Re voluntary contributions

    https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf

    Even if your wife no longer has relevant earnings she can still contribute up to 2880 per annum to a pension and receive tax relief of 720.

    https://forums.moneysavingexpert.com/showthread.php?t=5580163
    • Albermarle
    • By Albermarle 9th Oct 18, 5:35 PM
    • 142 Posts
    • 58 Thanks
    Albermarle
    • #7
    • 9th Oct 18, 5:35 PM
    • #7
    • 9th Oct 18, 5:35 PM
    Paying into a pension for my wife? In what way?

    Sorry I don't understand.
    You would give her the money to pay into her own pension . The reason is that she can gain tax relief on pension contributions up to a certain point ( see previous post ) even if she is not earning/paying any tax .
    Alternatively she could pay into her own pension herself from the 80K savings.
    As she will only contribute for a few years any new pension is best invested in lower ( but not zero risk) funds .
    • kidmugsy
    • By kidmugsy 9th Oct 18, 11:15 PM
    • 11,797 Posts
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    kidmugsy
    • #8
    • 9th Oct 18, 11:15 PM
    • #8
    • 9th Oct 18, 11:15 PM
    Is your wife earning at the moment?
    Free the dunston one next time too.
    • OldBlade
    • By OldBlade 10th Oct 18, 10:46 AM
    • 20 Posts
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    OldBlade
    • #9
    • 10th Oct 18, 10:46 AM
    • #9
    • 10th Oct 18, 10:46 AM
    She isn't employed but has a small income from an annuity.

    If she were to start a new pension to pay into, then she would get tax relief which would be cancelled out by the tax she would pay when taking the pension? So the benefit would be that she should get better growth than the cash ISAs etc she is getting now?
    • OldBlade
    • By OldBlade 10th Oct 18, 10:48 AM
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    OldBlade
    If I could find low risk funds (as opposed to 0 risk) but with some growth more than cash I would be happy. None of my Fidelity, Virgin or Aviva funds seem to provide growth!
    • kidmugsy
    • By kidmugsy 10th Oct 18, 11:24 AM
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    kidmugsy
    She isn't employed but has a small income from an annuity.

    If she were to start a new pension to pay into, then she would get tax relief which would be cancelled out by the tax she would pay when taking the pension? So the benefit would be that she should get better growth than the cash ISAs etc she is getting now?
    Originally posted by OldBlade
    She pays 2,880 into (say) a SIPP. The taxpayer, ever bountiful, adds 720. She then draws out most of the 3,600, leaving just enough behind to avoid any charge for early closure. She repeats each tax year. Unless her "small" annuity is bigger than "small" implies to me, she'd get that whole 3600 (or suitable lesser sum) tax-free.

    She could carry on until she takes State Pension. After that, if her state pension plus annuity exhaust her Personal Allowance, her gain from this game will decline from 720 p.a. to 180 p.a.

    Also, she might exploit the marriage allowance.
    https://www.gov.uk/marriage-allowance
    Free the dunston one next time too.
    • OldBlade
    • By OldBlade 10th Oct 18, 11:44 AM
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    OldBlade
    That's worth a punt! thanks for that.
    • OldBlade
    • By OldBlade 10th Oct 18, 12:12 PM
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    OldBlade
    With regard to allowances. I've already transferred the permitted part of her allowance to myself. Her annuity is around 8000 so with income of say 3500 from her new pension giving her an income of 11500. Her reduced allowance is 10610, so she would pay 20% on on the difference, ie 178.
    Even so, a gain of 542.
    • AlanP
    • By AlanP 10th Oct 18, 12:18 PM
    • 1,268 Posts
    • 930 Thanks
    AlanP
    With regard to allowances. I've already transferred the permitted part of her allowance to myself. Her annuity is around 8000 so with income of say 3500 from her new pension giving her an income of 11500. Her reduced allowance is 10610, so she would pay 20% on on the difference, ie 178.
    Even so, a gain of 542.
    Originally posted by OldBlade
    I don't think she would pay any tax as 25% of the withdrawal from the new pension would be the tax free lump sum so using your 3500 example 875 is tax free leaving 2625 as taxable income.

    2625 + 8000 = 10625 which will be under her tax allowance.
    • kidmugsy
    • By kidmugsy 10th Oct 18, 12:44 PM
    • 11,797 Posts
    • 8,307 Thanks
    kidmugsy
    With regard to allowances. I've already transferred the permitted part of her allowance to myself. Her annuity is around 8000 so with income of say 3500 from her new pension giving her an income of 11500. Her reduced allowance is 10610, so she would pay 20% on on the difference, ie 178.
    Even so, a gain of 542.
    Originally posted by OldBlade
    For what it's worth, the Hargreaves Lansdown SIPP is probably about ideal for this game. Just be sure to check their charges so that you know how much money to leave behind in the SIPP in tax year 18/19. And, of course, be sure to leave the money in the SIPP as cash - for heaven's sake don't decide to invest it. Also, leave the money in the SIPP long enough that the 720 from HMRC actually reaches the account - you need only check online. About 6 or 8 weeks should do the trick. You should also allow for the notice HL need before they pay money out - perhaps 4 weeks?

    Lastly, beware of having tax deducted that you then have to reclaim. One solution, apparently, would be to draw a small sum in the first month of drawdown so that HL get sent a tax code for your wife that would leave her a non-taxpayer when she draws the rest that she plans to drawdown. Mind you, apparently you can get the overpaid tax back pretty quickly at the cost of a single phone call. This has been mentioned on lots of threads - you could try a forum search.

    P.S. As AlanP argues, her tax bill should be next-to-nothing. So, she draws all her TFLS and nearly all of the rest. Then, starting on or after 06/04/19, she does it all again (unless this month's Budget changes the rules of the game).
    Free the dunston one next time too.
    • kidmugsy
    • By kidmugsy 10th Oct 18, 1:01 PM
    • 11,797 Posts
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    kidmugsy
    My wife ... has 80K in cash (savings and ISAs)

    I'm looking for suggestions for what we might do with this 160K in terms of the most productive investment.
    Originally posted by OldBlade
    If those are Cash ISAs, and if you are interested in getting best interest rates, there's a case for her withdrawing the money from the ISAs and using the best non-tax-sheltered accounts she can find. That's because she won't have to pay any tax on her interest anyway, and there are higher interest rates available outside ISAs than inside. She should probably look at regular savers (up to 5% AER), current accounts (also up to 5% AER), fixed term deposit accounts, and notice accounts.

    If, on the other hand, you two prefer that she invest in Stocks'n'Shares it would make for an easy life to keep the assets inside ISAs. As for you, since you are still earning you could presumably take money from savings and contribute it to a pension wherein you'd presumably invest it in S&S: the money is currently worth 6.25% more to you in a SIPP (say) than in an ISA - if we ignore costs. There's the added advantage that if you should die before age 75 then she could draw your SIPP money free of income tax.
    Free the dunston one next time too.
    • OldBlade
    • By OldBlade 13th Oct 18, 10:38 AM
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    OldBlade
    She has 10K invested with a Fidelity S&S ISA which has performed abysmally, as have my Virgin and Fidelity SIPPS.

    I have a pension I am contributing to with Aviva and am contemplating transfering my other two SIPPS into that and trying to find some more productive funds.

    Does anyone have any suggestions for Aviva funds that might show some return?

    Thanks for everyone's suggestions to date though, most useful and informative.
    • Dazed and confused
    • By Dazed and confused 13th Oct 18, 10:47 AM
    • 3,023 Posts
    • 1,505 Thanks
    Dazed and confused
    As kidmugsy had mentioned your wife may want to look at making her savings interest taxable income to gain a better rate than cash ISA's currently offer.

    From what you've posted it seems she doesn't have sufficient income to be able to use the Personal Savings Allowance but she has the starter savings rate which means up to 5,000 savings interest can be taxed at 0%.

    In her situation she will have, in the current year a maximum of 16,660 income before she has any tax to pay (assuming any wages/pension income is 10,660 or less).

    10,660 Personal Allowance
    5,000 starter savings rate (0%)
    1,000 Personal Savings Allowance rate (0%)

    She may want to wait for the budget in a couple of weeks before looking at changing the ISA's just on the off chance the savings rate changes from 0% (has been 0% for a few years now).
    Last edited by Dazed and confused; 13-10-2018 at 10:50 AM.
    • sheslookinhot
    • By sheslookinhot 13th Oct 18, 11:21 AM
    • 1,128 Posts
    • 754 Thanks
    sheslookinhot
    Would it not be better to take the SP now and invest the whole amount into your SIPP ?
    Mortgage Free
    Planning for Retirement
    • Albermarle
    • By Albermarle 13th Oct 18, 11:54 AM
    • 142 Posts
    • 58 Thanks
    Albermarle
    [QUOTE]
    She has 10K invested with a Fidelity S&S ISA which has performed abysmally, as have my Virgin and Fidelity SIPPS.

    I have a pension I am contributing to with Aviva and am contemplating transfering my other two SIPPS into that and trying to find some more productive funds.
    You have to be clear that the performance of any SIPP/personal pension is not related directly to the pension provider, but the underlying funds your money is invested in . It might be all you need to do is to change the funds in your existing pensions ( usually there is some choice , although the amount of choice can vary quite a lot ) rather than open a new one.
    Having said that, one area where the pension providers can be different is in their charging structure . Normally there is a charge for the pension and one for the funds , although sometimes there is just one overall charge . Older pensions tend to have higher charges than new ones and more complicated actively managed funds are more expensive then just simple tracker funds.
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