SIPP & Pension guidance - IM Private Clients
Discussion
Mr Pointy said:
pingu393 said:
I predict there will be a run on the pension funds as everyone tries to take their 25%.
It probably won't be too bad for IM, as most would do a transfer from SIPP to ISA or GIA, but it could collapse some of the others.
Why would there be a collapse? Banks collapse because they loan deposits out to make money & hence don't have all the deposited cash on hand. Pension funds use your deposit to buy an asset (stock, fund etc) & always have that asset to sell.It probably won't be too bad for IM, as most would do a transfer from SIPP to ISA or GIA, but it could collapse some of the others.
As I said earlier, I don't think it would hit IM, as most would just change from SIPP to ISA, or SIPP to GIA.
Most people have a pension, and just let it run until they want to crystallise. Very few actively manage it. They will hear the news and react.
Jockman said:
Whilst we’re on the subject……
If we get a Labour government and they enact their policy to reactivate an index linked lifetime allowance will they do the decent thing and free up the tax free lump sum to continue at 25% or will we end up with the worst of both worlds namely a moving LTA but a static TFLS?
Yeah, I know the acronyms are probably a bit old school.
Hello mate, long time no speak and I trust you are well.If we get a Labour government and they enact their policy to reactivate an index linked lifetime allowance will they do the decent thing and free up the tax free lump sum to continue at 25% or will we end up with the worst of both worlds namely a moving LTA but a static TFLS?
Yeah, I know the acronyms are probably a bit old school.
My advice in such circumstances would be to move to Portugal.
Hope that helps...
Seriously, as Nik has said, whilst Labour would be inclined to make changes or at least tinker, all voters have pensions and doing something that was bad news for all would not be a clever idea. Protection would be put in place for those with existing provision (as has been done before).
JulianPH said:
Hello mate, long time no speak and I trust you are well.
My advice in such circumstances would be to move to Portugal.
Hope that helps...
Seriously, as Nik has said, whilst Labour would be inclined to make changes or at least tinker, all voters have pensions and doing something that was bad news for all would not be a clever idea. Protection would be put in place for those with existing provision (as has been done before).
Hi mate I’m in Barbados at the moment as per every March but it really would be good to know when you’re back in the U.K. for a wee catch up. I have a box of diapers with your name on it. My advice in such circumstances would be to move to Portugal.
Hope that helps...
Seriously, as Nik has said, whilst Labour would be inclined to make changes or at least tinker, all voters have pensions and doing something that was bad news for all would not be a clever idea. Protection would be put in place for those with existing provision (as has been done before).
I do love Nik as you know but I would take a very minor issue with the comment about TFLS adjustments being mooted for many years. The reason being is that Jeremy Hunt bit the bullet and disconnected the TFLS from a percentage basis for many of your clients last year. Those clients will no longer be able to take 25% as they will be capped at the £1.07m level which in some cases will be a LOT LESS than 25%.
First world problems I know and apologies if I’ve misinterpreted the regs but as you will have noted from all my SIPPS I’m now focusing a lot more on household pensions rather than any single one
Jockman said:
Hi mate I’m in Barbados at the moment as per every March but it really would be good to know when you’re back in the U.K. for a wee catch up. I have a box of diapers with your name on it.
I do love Nik as you know but I would take a very minor issue with the comment about TFLS adjustments being mooted for many years. The reason being is that Jeremy Hunt bit the bullet and disconnected the TFLS from a percentage basis for many of your clients last year. Those clients will no longer be able to take 25% as they will be capped at the £1.07m level which in some cases will be a LOT LESS than 25%.
First world problems I know and apologies if I’ve misinterpreted the regs but as you will have noted from all my SIPPS I’m now focusing a lot more on household pensions rather than any single one
Hi mate, you are quite right, of course. Given the very small number of people this involved he probably considered it to be sending out the right message without impacting on many voters. More wide scale changes would impact on more people and that was the point I was trying to get across (less likely).I do love Nik as you know but I would take a very minor issue with the comment about TFLS adjustments being mooted for many years. The reason being is that Jeremy Hunt bit the bullet and disconnected the TFLS from a percentage basis for many of your clients last year. Those clients will no longer be able to take 25% as they will be capped at the £1.07m level which in some cases will be a LOT LESS than 25%.
First world problems I know and apologies if I’ve misinterpreted the regs but as you will have noted from all my SIPPS I’m now focusing a lot more on household pensions rather than any single one
Many thanks for the diapers. Fortunately I don't need them any more, but they will come in handy for Tom!
Cheer!
I am fully retired, in receipt of a DB pension, and have received in the present tax year a State pension lump sum. My pension provider initially told me they operate a Payroll Giving Scheme, so I asked to donate a modest sum each month to one of their named charities. I’ve also re-deferred my State Pension weekly payment for this year.
My pension provider has now told me they do not operate Payroll Giving after all. Main pension plus a few tens of pounds bank interest takes me around £3500 over my Personal Allowance. My understanding of EIM75750 - The taxation of pension income, is that unless I can, at this late stage of the tax year reduce my taxable interest, I’ll have 20% income tax to pay on my State Pension lump sum.
Might a SIPP for (say) £2880 from me, plus £720 from that nice Mr Hunt, do any good? Or am I too late?
My pension provider has now told me they do not operate Payroll Giving after all. Main pension plus a few tens of pounds bank interest takes me around £3500 over my Personal Allowance. My understanding of EIM75750 - The taxation of pension income, is that unless I can, at this late stage of the tax year reduce my taxable interest, I’ll have 20% income tax to pay on my State Pension lump sum.
Might a SIPP for (say) £2880 from me, plus £720 from that nice Mr Hunt, do any good? Or am I too late?
Autolycus said:
I am fully retired, in receipt of a DB pension, and have received in the present tax year a State pension lump sum. My pension provider initially told me they operate a Payroll Giving Scheme, so I asked to donate a modest sum each month to one of their named charities. I’ve also re-deferred my State Pension weekly payment for this year.
My pension provider has now told me they do not operate Payroll Giving after all. Main pension plus a few tens of pounds bank interest takes me around £3500 over my Personal Allowance. My understanding of EIM75750 - The taxation of pension income, is that unless I can, at this late stage of the tax year reduce my taxable interest, I’ll have 20% income tax to pay on my State Pension lump sum.
Might a SIPP for (say) £2880 from me, plus £720 from that nice Mr Hunt, do any good? Or am I too late?
Hi Autolycus, Nik is your man and will be along soon, but you are not to late for your plan.My pension provider has now told me they do not operate Payroll Giving after all. Main pension plus a few tens of pounds bank interest takes me around £3500 over my Personal Allowance. My understanding of EIM75750 - The taxation of pension income, is that unless I can, at this late stage of the tax year reduce my taxable interest, I’ll have 20% income tax to pay on my State Pension lump sum.
Might a SIPP for (say) £2880 from me, plus £720 from that nice Mr Hunt, do any good? Or am I too late?
Have you also considered your annual interest allowance for the cash at bank (£1,000 a year for basic rate tax payers, £500 a year for higher rate)? This is in addition to your personal income tax allowance.
A pension contribution and this allowance should give you all the leeway you are looking for. A charitable donation would look after anything else.
Nik can go though in more detail with you.
JapanRed said:
JapanRed said:
Hi team.
I’m about to move some funds into IM Lifestyle. The transfer options are “growth for income” or “growth for withdrawal”.
What’s the difference?
Can anyone from IM help with this please. Ideally I’d like to make the transfers before the weekend. I’m about to move some funds into IM Lifestyle. The transfer options are “growth for income” or “growth for withdrawal”.
What’s the difference?
Thanks.
privateclients@intelligentmoney.com
Marking it for the attention of Coops, Adam or Nik
Coops is usually very quick to replay, often within half an hour or so during business hours.
JapanRed said:
Can anyone from IM help with this please. Ideally I’d like to make the transfers before the weekend.
Thanks.
It's on the 'Your Questions Answered' threadThanks.
JulianPH said:
The confusion here stems from a naming issue regarding the target date (often retirement) options.
There really isn't an IM Lifestyle for income and one for withdrawal, there is just IM Lifestyle and the question is when to press the stop button on its journey through the glide path.
This glide path is exactly the same for all during the growth phases, but a few years away from your target date it can either;
We need to know what you would to happen with your glide path and so use the names 'income' and 'withdrawal' as the signpost for this.
So if you place 75% in the 'income' option and 25% in the 'withdrawal option (both with the same target date) you will achieve exactly what you are seeking.
Cheers
Julian
There really isn't an IM Lifestyle for income and one for withdrawal, there is just IM Lifestyle and the question is when to press the stop button on its journey through the glide path.
This glide path is exactly the same for all during the growth phases, but a few years away from your target date it can either;
- Stop at a balanced stage which is designed for drawing down a long term income from your returns whilst leaving any additional returns above this for capital growth, or
- Continuing down the glide path lowering risk/reward towards a very defensive portfolio designed to minimise fluctuations whilst still allowing for some market growth.
We need to know what you would to happen with your glide path and so use the names 'income' and 'withdrawal' as the signpost for this.
So if you place 75% in the 'income' option and 25% in the 'withdrawal option (both with the same target date) you will achieve exactly what you are seeking.
Cheers
Julian
Hi - new to the forum, please be kind ! I am 57 and wish to take early retirement 10 years before state pension kicks in. Whilst we have a large amount of savings available, we also have a similar volume in company pensions. Is it best for me to take a lump sum (25%) out of my pension pot to enhance my annual income and avoid tax OR would I be better leaving the pension pot alone and supporting my annual income out of my healthy savings current account. My pensions are with Mercer and Scottish Widows - could I go to one of these providers myself to merge the pensions into a SIPP. Have spoken to an IFA but 1.75% initial fee, ongoing 0.6% fee and adviser fee (£1700) chucked in towards the end of the conversation ! Many thanks for any advice
MRS S said:
Hi - new to the forum, please be kind ! I am 57 and wish to take early retirement 10 years before state pension kicks in. Whilst we have a large amount of savings available, we also have a similar volume in company pensions. Is it best for me to take a lump sum (25%) out of my pension pot to enhance my annual income and avoid tax OR would I be better leaving the pension pot alone and supporting my annual income out of my healthy savings current account. My pensions are with Mercer and Scottish Widows - could I go to one of these providers myself to merge the pensions into a SIPP. Have spoken to an IFA but 1.75% initial fee, ongoing 0.6% fee and adviser fee (£1700) chucked in towards the end of the conversation ! Many thanks for any advice
Hi Mrs S There are a lot of variables at play with any de-cumalation plan so unfortunately "rules of thumb" and general wisdom seldom helps.
I'm happy to set a call up and chat through your situation and offer any guidance that I can that may help you decide what is the right option for you.
No cost to you and no obligation. Just drop me a message at nik.burrows@imprivateclients.com and I will see if I can help
Nik
Autolycus said:
I am fully retired, in receipt of a DB pension, and have received in the present tax year a State pension lump sum. My pension provider initially told me they operate a Payroll Giving Scheme, so I asked to donate a modest sum each month to one of their named charities. I’ve also re-deferred my State Pension weekly payment for this year.
My pension provider has now told me they do not operate Payroll Giving after all. Main pension plus a few tens of pounds bank interest takes me around £3500 over my Personal Allowance. My understanding of EIM75750 - The taxation of pension income, is that unless I can, at this late stage of the tax year reduce my taxable interest, I’ll have 20% income tax to pay on my State Pension lump sum.
Might a SIPP for (say) £2880 from me, plus £720 from that nice Mr Hunt, do any good? Or am I too late?
HiMy pension provider has now told me they do not operate Payroll Giving after all. Main pension plus a few tens of pounds bank interest takes me around £3500 over my Personal Allowance. My understanding of EIM75750 - The taxation of pension income, is that unless I can, at this late stage of the tax year reduce my taxable interest, I’ll have 20% income tax to pay on my State Pension lump sum.
Might a SIPP for (say) £2880 from me, plus £720 from that nice Mr Hunt, do any good? Or am I too late?
As Julian has said you can make a pension contribution to reduce your taxable income, with no "relevant earnings" you can make a contribution of £2,880 topped up to £3,600 with the tax relief.
As long as the contribution is made this tax year it will count for your 23/24 assessment. There should be time for you get this set up with your provider of choice before the end of this tax year, but be aware that the easter break may cause some issues so if it is your preferred option I would set it up sooner rather than later.
Nik
Thank you, Nik
As I understand it, paying income tax on my lump sum is a cliff edge situation: if my employer pension exceeds my personal allowance, I'll pay £14k tax, if it doesn't, I pay zero. Which figure would added to my personal allowance for this purpose - £3600 or £2880? It's that close! I assume my few tens of pounds bank interest is completely covered by my £1000 savings band.
I'm happy to make a Gift Aid donation if that would help.
Thanks again.
As I understand it, paying income tax on my lump sum is a cliff edge situation: if my employer pension exceeds my personal allowance, I'll pay £14k tax, if it doesn't, I pay zero. Which figure would added to my personal allowance for this purpose - £3600 or £2880? It's that close! I assume my few tens of pounds bank interest is completely covered by my £1000 savings band.
I'm happy to make a Gift Aid donation if that would help.
Thanks again.
Autolycus said:
Thank you, Nik
As I understand it, paying income tax on my lump sum is a cliff edge situation: if my employer pension exceeds my personal allowance, I'll pay £14k tax, if it doesn't, I pay zero. Which figure would added to my personal allowance for this purpose - £3600 or £2880? It's that close! I assume my few tens of pounds bank interest is completely covered by my £1000 savings band.
I'm happy to make a Gift Aid donation if that would help.
Thanks again.
It is the Gross £3,600 that is usedAs I understand it, paying income tax on my lump sum is a cliff edge situation: if my employer pension exceeds my personal allowance, I'll pay £14k tax, if it doesn't, I pay zero. Which figure would added to my personal allowance for this purpose - £3600 or £2880? It's that close! I assume my few tens of pounds bank interest is completely covered by my £1000 savings band.
I'm happy to make a Gift Aid donation if that would help.
Thanks again.
Nik
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