Pension planning

[Michael Morris]

Anyone had any experience with working out their pensions.

I know several posters are closing in on that age, and many have already reached it.

Do you have multiple pensions or has anyone lumped them all together. Did you need a financial advisor?

It's a minefield of smoke and mirrors with mystery words and phrases that mean nothing to the lay person

Has anyone done a full pension round up and actually know where they stand?

[Don Corleone]

I think I’m in the same boat as you Mike, I have multiple pensions from different companies, some from the same company who closed one scheme and opened another - think I have 7 or 8 in total. Problem is every time I look to transfer one to amalgamate them a bit I’m always advised to leave it where it is

I have 2 schemes left from the old final salary scheme - they don’t pay a large sum but it is guaranteed, I wanted to transfer them to my current drawdown scheme but you have to get a financial advisor to approve it for a final salary scheme and neither of the ones I dealt with would do it as they are worried about being sued in the future for giving poor advice - thing is certainly with one of them I would have to live until I was in my mid 90’s to get the same sum and I can’t see that happening!

[Toadstool]

I'm 56 - had a pension from a well known local utility company that started paying out when I was 50.

I'm self employed - have two separate personal pensions that I pay into each month, and as I work through a Ltd company I have had to provide a "workplace" pension for both myself and my wife as employees.

I didn't use a financial advisor.

The two personal pensions allow me to select funds to invest in - I check them each month and then move funds around if I feel they need to.

As an aside when covid hit the two PP's dropped like a stone - I lost about 10-12% of their value, but as of now they have both recovered to pre-covid levels.

the good thing about the PP's is as well as my contributions the Gvt top them up as well with 20%.

[Toadstool]

If you have any final salary pensions I would say leave them as they are.

[BLUETIT]

To take out any money of your pensions, you have to go through a FA.

Luckerly, one travels on our coaches and he sorted mine out.

Don't get talked into Annuities, as it was explained to me, that if I clogged it, the kitty is gone.

Take out your entitled 25%, tax free and put the rest into a DRAWDOWN scheme.

That's what I've done and it's doing ok

Obviously, different people, will have different things to say, but I didn't like the fact that if anything happened to me, the Mrs (family) would lose out.

If you want my FA's phone number, I will text it to you, with his permission

[Michael Morris]

I think I’m in the same boat as you Mike, I have multiple pensions from different companies, some from the same company who closed one scheme and opened another - think I have 7 or 8 in total. Problem is every time I look to transfer one to amalgamate them a bit I’m always advised to leave it where it is

I have 2 schemes left from the old final salary scheme - they don’t pay a large sum but it is guaranteed, I wanted to transfer them to my current drawdown scheme but you have to get a financial advisor to approve it for a final salary scheme and neither of the ones I dealt with would do it as they are worried about being sued in the future for giving poor advice - thing is certainly with one of them I would have to live until I was in my mid 90’s to get the same sum and I can’t see that happening!

Sounds identical to me. I have three schemes that were all personal pensions. But Mrs M has about 6 of which three or four were company schemes including her current employment. State pension is at 67 so do you need to keep paying NI until then?

And looking at projections for one of the others if I claimed it at age 55 and lived for 25 years I'd get more money than if I waited until 65 and then claimed 15 year (based on living to 80)

Can you draw the pension from the personal pension and keep working? I guess you can but I suppose it will be classed as earning for my tax return.

[Michael Morris]

To take out any money of your pensions, you have to go through a FA.

Luckerly, one travels on our coaches and he sorted mine out.

Don't get talked into Annuities, as it was explained to me, that if I clogged it, the kitty is gone.

Take out your entitled 25%, tax free and put the rest into a DRAWDOWN scheme.

That's what I've done and it's doing ok

Obviously, different people, will have different things to say, but I didn't like the fact that if anything happened to me, the Mrs (family) would lose out.

If you want my FA's phone number, I will text it to you, with his permission

Thanks Tony. I'm speaking to PensionWise on Friday. I'll see what they have to say and if we decide we need an FA I'll PM you.

[Michael Morris]

If you have any final salary pensions I would say leave them as they are.

I don't.

The pension you got at 50, do you declare that as earnings - is it taxable.

[Re-sign Carl Dale]

Hi Mike. I’m an IFA and specialise in retirement planning - would be happy to have a chat at some point.

To answer your question, yes, you can draw and keep working - any pension income is taxed as unearned income (taxable but no national insurance is due).

As mentioned above, annuities aren’t too popular. I’ve never seen anyone “talked into them”. As are no ongoing fees for almost annuities,there is no incentive for an adviser to recommend them (me being cynical!) - however for many people, the flexibility of income drawdown outweighs the guaranteed income of an annuity - it depends what you have in terms of other assets and what your income needs are.

Rule of thumbs is that if it’s a company final salary style pension, it’s likely to be best left alone, if personal pensions then it often worth transferring to pool them together - but need to be careful that there aren’t any contractual guarantees built into them (lots of old pensions have these) - if these are transferred then the guarantees are lost.

I’d be slightly careful about taking the whole 25% tax free lump sum in one hit too. It depends on your circumstances, but it’s usually much more efficient to drip it out gradually if you don’t need cash immediately.
You don’t need to use an adviser (unless you have pensions with guarantees and then it’s a requirement) - however I would certainly recommend having a chat with someone who’s qualified to give advice before doing anything.

Like many things - we don’t know what we don’t know!

[Michael Morris]

Hi Mike. I’m an IFA and specialise in retirement planning - would be happy to have a chat at some point.

To answer your question, yes, you can draw and keep working - any pension income is taxed as unearned income (taxable but no national insurance is due).

As mentioned above, annuities aren’t too popular. I’ve never seen anyone “talked into them”. As are no ongoing fees for almost annuities,there is no incentive for an adviser to recommend them (me being cynical!) - however for many people, the flexibility of income drawdown outweighs the guaranteed income of an annuity - it depends what you have in terms of other assets and what your income needs are.

Rule of thumbs is that if it’s a company final salary style pension, it’s likely to be best left alone, if personal pensions then it often worth transferring to pool them together - but need to be careful that there aren’t any contractual guarantees built into them (lots of old pensions have these) - if these are transferred then the guarantees are lost.

I’d be slightly careful about taking the whole 25% tax free lump sum in one hit too. It depends on your circumstances, but it’s usually much more efficient to drip it out gradually if you don’t need cash immediately.
You don’t need to use an adviser (unless you have pensions with guarantees and then it’s a requirement) - however I would certainly recommend having a chat with someone who’s qualified to give advice before doing anything.

Like many things - we don’t know what we don’t know!

Thanks for that.

[Toadstool]

I don't.

The pension you got at 50, do you declare that as earnings - is it taxable.

Yes it is.

[SOXY BOY]

I’m in receipt of a final salary scheme pension and I pay 20% tax on it but no NI or SA. I think you have to pay NI for 30 years to claim the state pension but not sure, how you withdraw from it. For some, it may be worth delaying the state pension, if you have other pensions, as it will increase but if you die and have postponed it, your estate gets nothing, so it’s well worth getting some advice.

[IanD]

Thanks for that.

Also a good idea to have a look at your state pension forecast and find out if you are on track for a full state pension. As I finished work early (56) I've been paying voluntary class 3 National Insurance contributions to bump up my (eventual) state pension weekly amount. Mrs D (now self employed) has been paying class 2 NICs in order to do the same. You can backdate voluntary NICs, too. Currently class 3 is about £780/year. Do the maths and see how much longer you would need to live in order to get your money back and more. You will probably need to pay tax on state plus private pension so, as stated above, drawdown over several years, from a private pension pot is best, to avoid paying (too much) tax.

[IanD]

I’m in receipt of a final salary scheme pension and I pay 20% tax on it but no NI or SA. I think you have to pay NI for 30 years to claim the state pension but not sure, how you withdraw from it. For some, it may be worth delaying the state pension, if you have other pensions, as it will increase but if you die and have postponed it, your estate gets nothing, so it’s well worth getting some advice.

You can't take money out of your state pension. It really is worth getting in touch with Future Pensions to check where you stand on NI contributions and what % of a state pension you will receive. If you dont take your state pension it will increase (last I heard) by 5.6% per annum. Which is a good deal, if you can afford to. But, if you die in the meantime....tough. No payout.
You can also check your state pension online at Gov.uk but make sure you follow only official gov links to avoid having personal details taken or being charged for something you can do for free.

[Don Corleone]

Hi Mike. I’m an IFA and specialise in retirement planning - would be happy to have a chat at some point.

To answer your question, yes, you can draw and keep working - any pension income is taxed as unearned income (taxable but no national insurance is due).

As mentioned above, annuities aren’t too popular. I’ve never seen anyone “talked into them”. As are no ongoing fees for almost annuities,there is no incentive for an adviser to recommend them (me being cynical!) - however for many people, the flexibility of income drawdown outweighs the guaranteed income of an annuity - it depends what you have in terms of other assets and what your income needs are.

Rule of thumbs is that if it’s a company final salary style pension, it’s likely to be best left alone, if personal pensions then it often worth transferring to pool them together - but need to be careful that there aren’t any contractual guarantees built into them (lots of old pensions have these) - if these are transferred then the guarantees are lost.

I’d be slightly careful about taking the whole 25% tax free lump sum in one hit too. It depends on your circumstances, but it’s usually much more efficient to drip it out gradually if you don’t need cash immediately.
You don’t need to use an adviser (unless you have pensions with guarantees and then it’s a requirement) - however I would certainly recommend having a chat with someone who’s qualified to give advice before doing anything.

Like many things - we don’t know what we don’t know!

Sounds very sensible advice. The one thing I didn’t get when I asked about transferring a final salary scheme was I was told the transfer value was £190k but the guaranteed pension at 65 only £6k pa. That means I would have to live until I was nearly 100 to get that transfer value in the yearly pension and also the final salary scheme dies with you so wanted to transfer out but the FA wouldn’t advise it as too much risk involved - thought it was much more likely I will die before 100 ( having already survived cancer once) than to live way past 100 but seems all FA,s advise against moving the money from a final salary scheme and you can’t do it without their approval

[Hilts]

I’m in receipt of a final salary scheme pension and I pay 20% tax on it but no NI or SA. I think you have to pay NI for 30 years to claim the state pension but not sure, how you withdraw from it. For some, it may be worth delaying the state pension, if you have other pensions, as it will increase but if you die and have postponed it, your estate gets nothing, so it’s well worth getting some advice.

You cant claim State Pension until your qualifying age. To get a full pension at that age you need to have paid 30 years NI.

[binman]

£190K???

You can look after me IF I get to my 60s

[poc]

To take out any money of your pensions, you have to go through a FA.

Luckerly, one travels on our coaches and he sorted mine out.

Don't get talked into Annuities, as it was explained to me, that if I clogged it, the kitty is gone.

Take out your entitled 25%, tax free and put the rest into a DRAWDOWN scheme.

That's what I've done and it's doing ok

Obviously, different people, will have different things to say, but I didn't like the fact that if anything happened to me, the Mrs (family) would lose out.

If you want my FA's phone number, I will text it to you, with his permission

i did it all myself at 55 as you say 25% tax free and the rest paid monthly you dont need pay a advisor

[BLUETIT]

i did it all myself at 55 as you say 25% tax free and the rest paid monthly you dont need pay a advisor

You do now !

They've got to cover their arses, so you've got to show you have taken advice.

[life on mars]

Hi Mike. I’m an IFA and specialise in retirement planning - would be happy to have a chat at some point.

To answer your question, yes, you can draw and keep working - any pension income is taxed as unearned income (taxable but no national insurance is due).

As mentioned above, annuities aren’t too popular. I’ve never seen anyone “talked into them”. As are no ongoing fees for almost annuities,there is no incentive for an adviser to recommend them (me being cynical!) - however for many people, the flexibility of income drawdown outweighs the guaranteed income of an annuity - it depends what you have in terms of other assets and what your income needs are.

Rule of thumbs is that if it’s a company final salary style pension, it’s likely to be best left alone, if personal pensions then it often worth transferring to pool them together - but need to be careful that there aren’t any contractual guarantees built into them (lots of old pensions have these) - if these are transferred then the guarantees are lost.

I’d be slightly careful about taking the whole 25% tax free lump sum in one hit too. It depends on your circumstances, but it’s usually much more efficient to drip it out gradually if you don’t need cash immediately.
You don’t need to use an adviser (unless you have pensions with guarantees and then it’s a requirement) - however I would certainly recommend having a chat with someone who’s qualified to give advice before doing anything.

Like many things - we don’t know what we don’t know!

With uncertain times , could someone take the lump sum , then make weekly or lump sum contribute to the peoples pension , if ones is in say part/full time work one could make gather better tax efficiencies than saving in ISA's, as you get 25% tax relief as an employee and the employer contribution is attracting 25% ?

[Bluebird23]

You cant claim State Pension until your qualifying age. To get a full pension at that age you need to have paid 30 years NI.

Are you sure that’s correct? (I hope you are).

I thought I saw it had been changed to I think 37 years NI, for a full pension.

[Re-sign Carl Dale]

If you've been advised against transferring that's probably good advice. Unless it's clear that you can afford to give up a guaranteed income of £6,000 in exchange for flexibility then it's not likely to be in your best interests.

Unfortunately, when the pound signs start flashing, and the prospect of a juicy fee arise, some less scrupulous people would suggest transferring - and get paid handsomely.

Although £6k per annum may not seem a huge amount, it's a guaranteed income which is also inflation proofed for the rest of your life ... so that £6,000 today will be £6,100 next year, and so on. Plus if you're in a relationship there would usually be a widow's pension in there for those left behind. A £190k pot would be unlikely to provide the same level of guaranteed pension from an annuity, which should always be the starting comparison.

[Re-sign Carl Dale]

Could never guess that I'm stuck in the office waiting for my IT dept to call me!

I've posted more on this forum in the last 30 minutes than in the last 10 years!!

[Re-sign Carl Dale]

With uncertain times , could someone take the lump sum , then make weekly or lump sum contribute to the peoples pension , if ones is in say part/full time work one could make gather better tax efficiencies than saving in ISA's, as you get 25% tax relief as an employee and the employer contribution is attracting 25% ?

Hmmm ... yes and no.

'Recycling' your tax free lump sum back into a pension to get tax relief again is prohibited by HMRC. (Any pension has a declaration that you need to sign to confirm that your contributions haven't come from a pension lump sum).

However there's nothing stopping you living off that lump sum, and moving money from your own personal savings into a people's pension or similar.

[Re-sign Carl Dale]

Are you sure that’s correct? (I hope you are).

I thought I saw it had been changed to I think 37 years NI, for a full pension.

30 Years is correct ... however these won't include any years when you've been 'contracted out'. (What used to be called SERPS, or latterly the Second State Pension). Always best to get a forecast directly from Gov.uk site