pension advice please

[Terryf]

Originally Posted by steve-45

That's a shame, mine was really good and gave me a "redundancy" package too.

Check your state pension amount.

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

as your years of National Insurance contributions make a huge difference

to what state retirement pension you will get.

I checked my state pension when I retired at 57, was told I would not get the full pension. When I investigated it turned out they were talking about 23p per week. I retired.

[Darcydog]

Originally Posted by baxlin

It seems Darcydog has the relevant knowledge. As a former IFA (retired after 30+ years) I agree with his comments, particularly about getting professional advice. (Being retired, I have no vested interest in saying this!)

But look at the value of prof advice, not the cost, because compared to the size if your fund and the - hopefully - many years you will be using/receiving it the actual £.s.d falls into the realms of insignificance.

One point you might have missed is Darcydog's mention of Trusts. You should explore this too, and not only for the pension.

Now read my sig........

Many thanks - I would most certainly agree that the use of Trusts is not as widespread as it should be. My only concern is that some Trusts are irreversible and if Legislation changes then then it can result in people tying up assets in a Trust that is no longer relaxant.

The classic example was IHT planning re the family home where Joint Tenancy was changed to Tenants in Common with the first to die spouses half ownership going into a Trust so their IHT zero rate band was not lost.

Then the Government changed the law and now the Last Surviving Spouses estate can claim any unused IHT zero rate band as a right!

This change in the law left a lot of people with irrevocable Trust arrangements that were no long nessesary and in some cases actually detrimental.

But placing the death claim benefits iot a pension pot n a Trust is very different - right up until you die the wording and beneficiaries of the Trust can be changed - it can also be revoked entirely prior to death because the Trust does not exist until death.

On death, the Trust is formed and the Death Claim Value is paid into it. The beneficiaries (spouse, children usually - and in one notable case I dealt with, the individuals long term Mistress ) can then approach the Trustees for payments from the Trust.

As I say - very flexible, not irreversible and amazingly tax efficient.

[myfirstrover]

Just to add to the confusion , i should say it's a LGPS (local government pension scheme ) which has a fair few differences to other pension pots . Looks like I'm going to have to do a lot more research on this .

[Darcydog]

Originally Posted by myfirstrover

Just to add to the confusion , i should say it's a LGPS (local government pension scheme ) which has a fair few differences to other pension pots . Looks like I'm going to have to do a lot more research on this .

In which case DO NOT consider transferring away from what is a first class scheme. It is the type of scheme that is so expensive to run because the benefits are so good that Companies in the Private Sector have had to ditch them for their employees but the Government schemes - Civil Service, NHS and Local Government schemes are funded via Taxes and so Public Sector pension schemes are still of the old, hugely beneficial sort.

Please don't think I am "having a go" - but most people do not realise that anything between 20% and 30% of what they pay in Council Tax actually goes to fund the pensions of retired ex Local Government employees.

Thus many people are paying more money into other people's pensions than they can afford to pay into their own.

[baxlin]

Originally Posted by Darcydog

Many thanks - I would most certainly agree that the use of Trusts is not as widespread as it should be. My only concern is that some Trusts are irreversible and if Legislation changes then then it can result in people tying up assets in a Trust that is no longer relaxant.

The classic example was IHT planning re the family home where Joint Tenancy was changed to Tenants in Common with the first to die spouses half ownership going into a Trust so their IHT zero rate band was not lost.

Then the Government changed the law and now the Last Surviving Spouses estate can claim any unused IHT zero rate band as a right!

This change in the law left a lot of people with irrevocable Trust arrangements that were no long nessesary and in some cases actually detrimental.

Not sure I 100% agree with your last paragraph, but as it's taking the thread off topic, let's just say this endorses the importance of face to face, rather than distance advice for major financial planning!

Malcolm

[bubs]

My dad was in the same place a few of years ago. He decided to opt for the longer pension payout rather than a lump sum. 3 months later he got diagnosed with terminal cancer and was dead within a year at the age of 64.
I would take the lump sum, you can always make more later but can't benefit from it if you're not here

[Darcydog]

Originally Posted by bubs

My dad was in the same place a few of years ago. He decided to opt for the longer pension payout rather than a lump sum. 3 months later he got diagnosed with terminal cancer and was dead within a year at the age of 64.
I would take the lump sum, you can always make more later but can't benefit from it if you're not here

A very good point - hence my saying above that whilst money purchase schemes do not have the guaranteed benefits of a Defined Benefit Final Salary scheme - they do now have the distinct advantage of the pot of money within the pension being yours such that on death you can pass the pot on to your spouse or even your children now.

Contrast that to a Final Salary scheme where your spouse gets a percentage (usually 50%) of the deceased members pension.

Whilst a Final Salary scheme is undoubtedly more secure - the payments in retirement are guaranteed for life. And whilst that is a worthwhile guarantee - is the money cannot run out - if you die too early, then that guaranteed income dies with you.

Taking the "Tax Free Cash" in full was invariably sensible for this reason plus the fact that in years gone by, the interest gained on this lump sum was reasonable.

Today the interest you get is anything but reasonable.

So the decision is more difficult. This is where deferring via phasing enables you to slice your pension rather than taking it all now and burning all your bridges. It sadly not really an option for defined benefit scheme members - and only a very recent development for those with defined contribution schemes

[hinged_bap]

Originally Posted by myfirstrover

I would probably have to get a part time job just as a "top up" (and to get me away from the wife ) plus there is only so much decorating , d.i.y , car cleaning etc that i could do !

that reminds me of a comment made by a retired colleague I recently met at the checkout in a local supermarket, he'd retired circa 2 years ago.

I asked him (sic) "are you enjoying your retirement". His reply was: "I was - until she retired 6 months ago" ( pointing at his wife ).

[Darcydog]

Originally Posted by hinged_bap

that reminds me of a comment made by a retired colleague I recently met at the checkout in a local supermarket, he'd retired circa 2 years ago.

I asked him (sic) "are you enjoying your retirement". His reply was: "I was - until she retired 6 months ago" ( pointing at his wife ).

I am not so sure a total stopping of work is a good thing - too many good friends did that and developed health problems within a year or two. Those that got a little job seemed to thrive.

I am now doing something totally different to what I did as my career and loving every minute of it!

Whereas it used to be 40 to 45 hour weeks I now do no more than 20 - Tue Wed Thur so I have lovely long weekends and I haven't had to start taking benefits from my pension yet - and I get my OAP later this year!

I think I will just save that.

It's amazing how little you need when the kids have left home and it's just the two of you both working part time - SWMBO works Wed Thur Fri.

Wish I had done this years ago.

[baxlin]

I finally retired last September, and sold my share of my company. I had cut down on my hours over the previous couple of years, and have yet to be bored or at a loss for something to do.

I anticipate doing some voluntary work in due course, but I'm in no hurry!