Savings and Investments thread

golfaddick

bobmunro said:

Rob7Lee said:

MSt

All thanks for your input I really appreciate it. 

I have been putting into a pension for a while and whilst I have a few years to go it’s not that many. I was talking to a friend and he told me that he had been told he would need to pay tax on it all after the 25% I didn’t think this was the case but I wasn’t sure. 

I have a while to go but appreciate the knowledge  GA. 

It may well be terminology, after the 25% it all becomes taxable when you draw it, subject to the personal allowance so depends on other income and what the prevailing personal allowance is at any given tax year. I can see the personal allowance drifting backwards, it's already gone for the higher earners.

With the state pension being over 9k now it doesn't leave much of any private pension that will remain tax free upon state pension age anyway.

According to my HMRC account, my state pension forecast is £11,940 (£995 pm). Pretty sure that's the max based on 40 years of contributions. So pretty much the existing personal allowance (I wish!).

Moving the personal allowance back to less than the state pension would be somewhat resisted I would suggest.

I am very surprised at that figure & if I were you I would double check it. I've been in the industry for 30 years & not seen anyone with a state pension into 5 figures. Add into the fact that anyone that has been in a contracted out employer pension will have a certain amount deducted from the state pension on retirement. 

bobmunro

golfaddick said:

bobmunro said:

MStuartPerm said:

thanks again for all the info from all that have replied.

i must admit I have worked on the assumption I will get sod all for the state pension, anything would be a bonus. Still I expect it  will be up past 70 soon! 

I'm currently due at 66 (3 years) - I don't expect that to remain the same and will likely go to 68 or even 70. Anyone say in their 40s now will likely never draw a state pension.

I don't agree. The state pension will be around age 70 for anyone starting work now but it will never be erased. That would be political suicide.........and  there are still millions of people who don't save towards a pension. Although they are compulsory for employees (and then you gave a right to opt out after 3 months) there are 5m self employed people & many dont save towards a pension. 

The auto-enrolment opt out is after 1 month. The process is repeated every 3 years.

I'm not so sure the state pension won't at some point disappear, to be replaced with compulsory insurance/investment based pension schemes that do not have an opt out.

Rob7Lee

I checked my state pension on the Government gateway, I'll have 51! years contributions, and it tells me the maximum is £176.58 a week or 9,182.16 per annum.

Think i'm right in saying the maximum contributions years is 35 for the state pension, so actually only 3 more years for me then doesn't matter if I work or not for the pension. 

bobmunro

Rob7Lee said:

I checked my state pension on the Government gateway, I'll have 51! years contributions, and it tells me the maximum is £176.58 a week or 9,182.16 per annum.

Think i'm right in saying the maximum contributions years is 35 for the state pension, so actually only 3 more years for me then doesn't matter if I work or not for the pension. 

ROBERT MUNRO

Your State Pension summary

Show your National Insurance number

You can get your State Pension on 30 May 2023. Your forecast is

£228.90 a week

£995.31 a month, £11,943.68 a year

Your forecast

• is not a guarantee and is based on the current law
• is based on your National Insurance record up to 5 April 2020
• does not include any increase due to inflation

£228.90 is the most you can get

You cannot improve your forecast any more.

HardyAddick

The Gov website is confusing. It gives me a figure but says it can be lower. As I contracted out it will be but I still am not sure what the figure will be. I am not relying on it and never have.

bobmunro

HardyAddick said:

The Gov website is confusing. It gives me a figure but says it can be lower. As I contracted out it will be but I still am not sure what the figure will be. I am not relying on it and never have.

I'm not relying on it but that's what mine says. Based on what @golfaddick and @Rob7Lee are saying mine might be an error anyway!

mendonca

I get the impression that markets may have peaked for a while now. 

eaststandmike

Bob, I think you might be the same as me. Have you been paid a good/high salary for a number of years paying a lot of tax and NI?
I did for a number of years before I went over to directors loans and dividends and this has resulted in me receiving an above average state pension when I retire. 

CharltonKerry

Can’t quiet bet Bobs state pension, but I’m getting paid £988.84 every 4 weeks which equate to £12854.92p / 52 weeks, like Bob I’ve earned good money, been a director etc., I was surprised when I started claiming it, that it was so much.

bobmunro

eaststandmike said:

Bob, I think you might be the same as me. Have you been paid a good/high salary for a number of years paying a lot of tax and NI?
I did for a number of years before I went over to directors loans and dividends and this has resulted in me receiving an above average state pension when I retire. 

Yes, I'm very fortunate to be in that position.

That may explain it.

golfaddick

CharltonKerry said:

Can’t quiet bet Bobs state pension, but I’m getting paid £988.84 every 4 weeks which equate to £12854.92p / 52 weeks, like Bob I’ve earned good money, been a director etc., I was surprised when I started claiming it, that it was so much.

Ok, I stand corrected. 

Funny because I deal a lot with doctors, some on incomes in excess of £150k. None of them have state pensions in excess of £9k pa.

CharltonKerry

golfaddick said:

CharltonKerry said:

Can’t quiet bet Bobs state pension, but I’m getting paid £988.84 every 4 weeks which equate to £12854.92p / 52 weeks, like Bob I’ve earned good money, been a director etc., I was surprised when I started claiming it, that it was so much.

Ok, I stand corrected. 

Funny because I deal a lot with doctors, some on incomes in excess of £150k. None of them have state pensions in excess of £9k pa.

Could it be that I never been out of work, not even for a day and been working for just over 50 years when I drew my first state pension?

bobmunro

CharltonKerry said:

golfaddick said:

CharltonKerry said:

Can’t quiet bet Bobs state pension, but I’m getting paid £988.84 every 4 weeks which equate to £12854.92p / 52 weeks, like Bob I’ve earned good money, been a director etc., I was surprised when I started claiming it, that it was so much.

Ok, I stand corrected. 

Funny because I deal a lot with doctors, some on incomes in excess of £150k. None of them have state pensions in excess of £9k pa.

Could it be that I never been out of work, not even for a day and been working for just over 50 years when I drew my first state pension?

Or something to do with SERPS? I know it was scrapped 2016 but I believe the government still factor it in when arriving at the final figure for those who had paid into it in the past - so it is possible to get more than the £175 a week.

CharltonKerry

bobmunro said:

CharltonKerry said:

golfaddick said:

CharltonKerry said:

Can’t quiet bet Bobs state pension, but I’m getting paid £988.84 every 4 weeks which equate to £12854.92p / 52 weeks, like Bob I’ve earned good money, been a director etc., I was surprised when I started claiming it, that it was so much.

Ok, I stand corrected. 

Funny because I deal a lot with doctors, some on incomes in excess of £150k. None of them have state pensions in excess of £9k pa.

Could it be that I never been out of work, not even for a day and been working for just over 50 years when I drew my first state pension?

Or something to do with SERPS? I know it was scrapped 2016 but I believe the government still factor it in when arriving at the final figure for those who had paid into it in the past - so it is possible to get more than the £175 a week.

Was it SERPS what you opted out off, then opted in dependent upon if you had a private pension or a company pension, I know I’ve opted in and out on many occasions, I was also self employed for a period, and forgot to stop my standing order so was paying over the top NI for a couple of years.

bobmunro

CharltonKerry said:

bobmunro said:

CharltonKerry said:

golfaddick said:

CharltonKerry said:

Can’t quiet bet Bobs state pension, but I’m getting paid £988.84 every 4 weeks which equate to £12854.92p / 52 weeks, like Bob I’ve earned good money, been a director etc., I was surprised when I started claiming it, that it was so much.

Ok, I stand corrected. 

Funny because I deal a lot with doctors, some on incomes in excess of £150k. None of them have state pensions in excess of £9k pa.

Could it be that I never been out of work, not even for a day and been working for just over 50 years when I drew my first state pension?

Or something to do with SERPS? I know it was scrapped 2016 but I believe the government still factor it in when arriving at the final figure for those who had paid into it in the past - so it is possible to get more than the £175 a week.

Was it SERPS what you opted out off, then opted in dependent upon if you had a private pension or a company pension, I know I’ve opted in and out on many occasions, I was also self employed for a period, and forgot to stop my standing order so was paying over the top NI for a couple of years.

I can't remember the mechanics but I do remember being in it for a period.

Hard to think of any other reason why my forecast is so high - yes I'm a high earner but I can't find anything that says the more tax/NI you pay the higher the State Pension.

eaststandmike

bobmunro said:

eaststandmike said:

Bob, I think you might be the same as me. Have you been paid a good/high salary for a number of years paying a lot of tax and NI?
I did for a number of years before I went over to directors loans and dividends and this has resulted in me receiving an above average state pension when I retire. 

Yes, I'm very fortunate to be in that position.

That may explain it.

I am 100% sure that will be it. When my original business partner retired in 2002 he was shocked at his state pension forcast, he asked the reason why and they explained it was due to the fact he had been on a very high PAYE salary for 12 years (since 1990). And it was not just the tax that contributed to the high pension figure but also the National Insurance payments he had made.

I am in the same boat as we only went over to directors loans & dividend payments in 2003 onwards so happy days.  

CharltonKerry

This has got me wondering I’ve, therefore I’ve looked at my latest pension statement which break down there payments into 2 lines firstly the basic state pension of £175.20p with a further protected payment of £71.91p.

valleynick66

Money Saving Expert says:

And some people can get more. Under the previous state pension rules, workers were able to build up what's known as the additional state pension (also called the second state pension, S2P, or SERPS) – a top-up to the former basic state pension. Although the current rules have now scrapped this top-up, the Government has allowed many workers in their 40s, 50s and early-60s to keep their existing entitlement.

This is part of the Government's pledge that people who worked to build up a healthy state pension under the previous rules shouldn't lose out under the new ones.

To make it work – and it is fiendishly complicated – what you'll get depends on a so-called 'starting sum' calculation. This compares what you'd have been entitled to under the old and new regimes – and, in a nutshell, you'll get the higher of the two.

This extra money is known as your 'protected payment' and will be highlighted on your state pension statement

bobmunro

valleynick66 said:

Money Saving Expert says:

And some people can get more. Under the previous state pension rules, workers were able to build up what's known as the additional state pension (also called the second state pension, S2P, or SERPS) – a top-up to the former basic state pension. Although the current rules have now scrapped this top-up, the Government has allowed many workers in their 40s, 50s and early-60s to keep their existing entitlement.

This is part of the Government's pledge that people who worked to build up a healthy state pension under the previous rules shouldn't lose out under the new ones.

To make it work – and it is fiendishly complicated – what you'll get depends on a so-called 'starting sum' calculation. This compares what you'd have been entitled to under the old and new regimes – and, in a nutshell, you'll get the higher of the two.

This extra money is known as your 'protected payment' and will be highlighted on your state pension statement

Mystery solved.

golfaddick

CharltonKerry said:

This has got me wondering I’ve, therefore I’ve looked at my latest pension statement which break down there payments into 2 lines firstly the basic state pension of £175.20p with a further protected payment of £71.91p.

Solved......it will be your SERPS then. Sorry, but I had assumed everyone had opted out of SERPS in the late 80's early 90's. I know when I starred working for at the Prudential in 1991 that was the easy sell......and we got £15 per case IIRC.

golfaddick

I've come back to add as it seems I can't edit my previous post.......

Interesting to note that when the original decision to opt out of SERPS the money receive (basically a NI rebate) could only be taken as income upon retirement. Then in 2006 Gordon Brown simplified pensions & from then on all pension plans (including SERPS, AVC's & FSAVC's) were deemed to be one & the same, meaning that they all counted as part of your DC pot.

The upshot if that is.......your extra "protecred" pension is now deemed to be income & therefore taxable, but if it was part of your DC pot you could take 25% as a tax free lump sum.

Over the years I have transferred all my pension schemes into one......including a couple of old final salary schemes (hardly worth talking about - 3 years in one & 8 years in another) as well as an FSAVC. All that money now sits in my SIPP, which I have control of & can invest whenever & wherever I like.....with the advantage of planning the date of my retirement & accessing parts of my pension as I see fit. 

cherryorchard

For what it's worth:
I reached retirement age for state pension at 62 years 11 months and 12 days! I claimed it from age 64 years and 2 months.

Weekly pension per week, this year from April Is: Basic: £134.25, Pre 97 additional state pension  £22.77 less contracted out deduction (COD) of £0.07, Post 97 additional state pension £23.13, Extra - basic state pension £16.02 Extra Additional state Pension £5.69, Graduated Retirement Benefit Benefit £3.57.

This gives a weekly total of  £205.36 , so annual pension of £10678.72 

I started work in 1971.

LargeAddick

My annual state pension will be about 9,800 I believe.

Rob7Lee

golfaddick said:

......

Over the years I have transferred all my pension schemes into one......including a couple of old final salary schemes (hardly worth talking about - 3 years in one & 8 years in another) as well as an FSAVC. All that money now sits in my SIPP, which I have control of & can invest whenever & wherever I like.....with the advantage of planning the date of my retirement & accessing parts of my pension as I see fit. 

Same as me, I transferred my only Final Salary scheme about 5-6 years ago into my SIPP, It's currently done a lot better than had I remained in the FS scheme. Seemed a no brainer at the time as it was around 38 times they were offering to take out.

Salad

I've just started claiming my biggest pension pot, got a lump sum, just about into 6 figures, planning to use company like Fidelity/Aviva and put it in a spread of funds, mainly low/medium risk.
I will spread it, perhaps £10k a month for example. I don't have any ISAs. We have fair bit of equity in the house so will probably avoid putting more into property investments.
Any suggestions appreciated on fund types that might be promising, and ones to avoid? 

golfaddick

Just seen the closing figures on the financial markets.

FTSE100 down almost 4%. Most European markets down between 4.5% -5%. Dow Jones currently down 5.3%. 

Is this the 2nd wave......

golfaddick

Salad said:

I've just started claiming my biggest pension pot, got a lump sum, just about into 6 figures, planning to use company like Fidelity/Aviva and put it in a spread of funds, mainly low/medium risk.
I will spread it, perhaps £10k a month for example. I don't have any ISAs. We have fair bit of equity in the house so will probably avoid putting more into property investments.
Any suggestions appreciated on fund types that might be promising, and ones to avoid? 

You need a balanced portfolio that contains equities, corporate bonds, gilts & even commercial property funds. The latter are mostly closed atm so leave that asset class until later on the year but still try to have between 5%-10% in them when you can.

The split between the other asset classes is really dependant on your attitude to risk & which is something you should discuss with a financial advisor.

mendonca

This looks the 2nd wave. Golfie would you advise moving holdings in funds to cash and then transfer (reinvest) into funds once I feel more comfortable? 

golfaddick

mendonca said:

This looks the 2nd wave. Golfie would you advise moving holdings in funds to cash and then transfer (reinvest) into funds once I feel more comfortable? 

Hard to say really. Even if you do a switch tonight the fund prices that will be used will be based on tonight's closing at best. So you will be selling in a falling market. Obviously you could get out now & the markets continue to fall so you wont be getting out at the bottom, but that is a risky strategy. It is usually best just to sit tight, but if you have spare capital then it won't be a bad idea to be buying now. FTSE100 down around 6% from this time last week & down around 25% from it's all time high.

superclive98

Dow Jones now 7% down.