Pensions advice, please.

[Drago]

Looking forward to my pension in April, and at 48 I'll be young enough to enjoy it.

 

[fossyant]

Looking forward to my pension in April, and at 48 I'll be young enough to enjoy it.

Lucky sod. 46 and got to work until 67 !

 

[Drago]

It's small consolation for 3 decades of working abroad, being shot at, stabbed, having broken bones, spat on, pissed on, shift work, generally dealing with the filth and dregs that no one else wants to know about, and having few transferable skills at the end of it. I'm not complaining, but I've definitely earned it the hard way.

I've been offered anti piracy security work on ships off the horn of Africa, and the pay is mind bending buy I can't leave Mrs Drago cos of her MS, so it's self employment for me. Still want to work, earn and contribute. I'll be in my Fifties before my wee one has finished primary school an I can fully retire back to Shetland.

 

[accountantpete]

I'd like to resurrect an old thread if I may.

My problem is that I'm hearing rumours that my employer is considering changing the terms of their defined benefit scheme such that my plan to retire at 55, in 3.5 years time, is suddenly no longer viable and I'm going to have to keep working to at least 59. So that gives me 8.5 years to accumulate some further savings.
So my question is what savings options should I be looking at that would give a worthwhile return over such a short period ?
The only option I know anything about currently is to buy AVCs from my employer. The returns look pretty woeful but they are taken from salary before tax so if I was to buy say £500 of them a month that would be a significant reduction in my tax bill.
Further thoughts welcome please.

As suggested above - get a SIPP.

The government deems any amount invested to be net of basic rate tax so you automatically get effectively 25% added on - ie for every £100 invested the government will give you £25.

It is important to tell the Pension company when you plan to retire.



In the last 10 years of a pension you want the fund invested in "safe" options with low interest but check on the fees that will be charged.

You are able to withdraw 25% of the final scheme value tax free -so ideally you withdraw it when not working between the ages of 59 and 66 so as to use your personal allowances and avoid any tax whatsoever.

NB: For anybody who may be reading:

Check whether you have any old pension policies lying around where contributions were stopped. A lot of SIPP's etc in the 80's and 90's had amazing guarantees (eg 5% minimum returns!) and you may be able to resurrect the policy by recommencing paying in (with the guarantees still being applied).

 

[Brandane]

It's small consolation for 3 decades of working abroad, being shot at, stabbed, having broken bones, spat on, pissed on, shift work, generally dealing with the filth and dregs that no one else wants to know about, and having few transferable skills at the end of it. I'm not complaining, but I've definitely earned it the hard way.

I've been offered anti piracy security work on ships off the horn of Africa, and the pay is mind bending buy I can't leave Mrs Drago cos of her MS, so it's self employment for me. Still want to work, earn and contribute. I'll be in my Fifties before my wee one has finished primary school an I can fully retire back to Shetland.

I thought you were a Sergeant; since when did they get their hands dirty?

 

[GrumpyGregry]

High returns over short terms = high risks.

I'd go and speak to an IFA - I can recommend a decent one if you PM me.

 

[sheddy]

As suggested above - get a SIPP

You are able to withdraw 25% of the final scheme value tax free -so ideally you withdraw it when not working between the ages of 59 and 66 so as to use your personal allowances and avoid any tax whatsoever.

I thought that the 25% option was completely tax free ? Are you saying that it is still classed as income (and so liable to income tax?)

I was hoping to take out approx £20k from a previous pension to tie us over a few years until we can downsize.

 

[accountantpete]

I thought that the 25% option was completely tax free ? Are you saying that it is still classed as income (and so liable to income tax?)

I was hoping to take out approx £20k from a previous pension to tie us over a few years until we can downsize.

Sorry - I meant the remainder (ie 75%). 25% is completely tax free.

BTW I believe the 25% tax free calculation is applied to each withdrawal. So If you withdraw £20,000 out of say a £80,000 pot then £5k is tax free and the balance of £15,000 is taxable income (any unused personal allowances can be set against this of course).

 

[Flick of the Elbow]

Thanks for the replies so far. What would be the advantages/disadvantages of a SIPP verses buying AVCs ?

 

[srw]

A SIPP is likely to be much more expensive than AVCs. Close to retirement with affordability considerations, if it were me I'd do AVCs for the security.

(NB - this isn't advice! I'm not allowed to give advice.)

 

[accountantpete]

Thanks for the replies so far. What would be the advantages/disadvantages of a SIPP verses buying AVCs ?

You need to speak to a specialist - an AVC may have lower charges and a SIPP may offer a bigger range of investment and better or lower returns

 

[Licramite]

biggest problem about taking out your pension is going to be tax. I would take all mine out as working out the figures all my financial wizards have done is divide my pension pot by the estimated number of years I will live and given me the result -( I can do that!) - They get to keep any interest + half if I die early - which is very nice - for them. - but of course my taxman takes 40% of 3/4 of it. - so it sits earning my pension company money -

 

[GrumpyGregry]

A SIPP is likely to be much more expensive than AVCs. Close to retirement with affordability considerations, if it were me I'd do AVCs for the security.

(NB - this isn't advice! I'm not allowed to give advice.)

^This.

You can always direct your AVC's into higher risk or lower fee funds if you feel you need the extra return. I'd go for a blend myself.

 

[LocalLad]

Please don't take advice from here...go see an ifa, a worthwhile investment

 

[vernon]

Lucky sod. 46 and got to work until 67 !

I'm 57 years 10 months and 7 days old and I get made redundant when I'm 57 years 11 months and 24 days old with a redundancy payment that's the equivalent of a year's net salary that is tax free.

I have to decide whether or not to take a 9% actuarially reduced pension and lump sum at 58 and have fun with the redundancy payment or live of the redundancy payment for a year and take a 4% actuarially reduced pension and lump sum.

I am minded to have fun though I might get different advice at the teacher's retirement course that I'll be attending next month.