pension options
Discussion
hello all
I have a civil service pension. I am 38 years old at the moment.
my civil service pension is a combo of nuvos and alpha. the figures look great on a screen but only if I manage to soldier on until I am in my mid to late 60s, which isn't going to happen.
I think it more likely I'll probably want to jack it in, in about 20 years time give or take, and probably no later than 60 at which point I would get about 33/35k a year gross from my CS pension.
now turning to the issue I have at the moment. As of next year my salary will be going up to roughly 67/68k.
I have previously been chucking a lot of money into the civil service pension as an overpayment to get me below 50k so I get the child benefit. That was ok when I only had to put in a fairly modest amount of money. Now given the salary increase as of next year, I am going to have to chuck in 8k or so as an overpayment to get my net adjusted salary below 50k. If I do that then I get 1900 quid or whatever it is as child benefit (which would require me to earn very nearly double that PAYE to get the 1900 net).
have you fallen asleep yet? good, come with me a little further.
So I have, certainly for the next 3 or 4 years, the liquidity to make these fairly large overpayments into a pension to get my net adjusted income down to 50k.
given the ever increasing age I can access the civil service pension I am wondering now whether I should set up a pension with vanguard or whatever and chuck these overpayments into it for the next 3 or 4 years. my thought to doing this is that whilst the civil service pension is gold plated, I don't want to be 65 before I retire. So if I set up something with vanguard I might be able to bridge 2 or 3 years with it before I access my civil service pension.
obviously that will then be invested in the real word rather than the civil service lala land pension where it doesn't go down.
given I don't want to work until the normal civil service retirement age - am I missing a trick here or am I on the right lines? my wife says I should just dump the child benefit and enjoy the extra income, but the extra net income from my increased salary will only be 500 or so a month - nice to have but not life changing.
any thoughts on this very first world problem?
I have a civil service pension. I am 38 years old at the moment.
my civil service pension is a combo of nuvos and alpha. the figures look great on a screen but only if I manage to soldier on until I am in my mid to late 60s, which isn't going to happen.
I think it more likely I'll probably want to jack it in, in about 20 years time give or take, and probably no later than 60 at which point I would get about 33/35k a year gross from my CS pension.
now turning to the issue I have at the moment. As of next year my salary will be going up to roughly 67/68k.
I have previously been chucking a lot of money into the civil service pension as an overpayment to get me below 50k so I get the child benefit. That was ok when I only had to put in a fairly modest amount of money. Now given the salary increase as of next year, I am going to have to chuck in 8k or so as an overpayment to get my net adjusted salary below 50k. If I do that then I get 1900 quid or whatever it is as child benefit (which would require me to earn very nearly double that PAYE to get the 1900 net).
have you fallen asleep yet? good, come with me a little further.
So I have, certainly for the next 3 or 4 years, the liquidity to make these fairly large overpayments into a pension to get my net adjusted income down to 50k.
given the ever increasing age I can access the civil service pension I am wondering now whether I should set up a pension with vanguard or whatever and chuck these overpayments into it for the next 3 or 4 years. my thought to doing this is that whilst the civil service pension is gold plated, I don't want to be 65 before I retire. So if I set up something with vanguard I might be able to bridge 2 or 3 years with it before I access my civil service pension.
obviously that will then be invested in the real word rather than the civil service lala land pension where it doesn't go down.
given I don't want to work until the normal civil service retirement age - am I missing a trick here or am I on the right lines? my wife says I should just dump the child benefit and enjoy the extra income, but the extra net income from my increased salary will only be 500 or so a month - nice to have but not life changing.
any thoughts on this very first world problem?
Are you sure it's not possible to go before your NRA and take a defined percentage hit on your annual pension? Additional savings in a DC pension can replace the difference by drawdown, rather than rapidly depleting this pot taking it as a salary (if I've read correctly).
Is there a level pension option? Leave early but with a higher pension earlier on that reduces by an amount similar to what you receive in state pension when you get there.
Is there a level pension option? Leave early but with a higher pension earlier on that reduces by an amount similar to what you receive in state pension when you get there.
The actuarial reduction if I go at say 55 or 56 on the civil service pension is absolutely staggering - I'd only get a pension of 22/23k or so give or take if I go at that age, that's even if I'll be able to do it in 20 years because I think"early" retirement will considered to be at 60 instead of the 55 or so it currently is.
Id guess lobbing in the extra overpayments would defray it a bit but the fact is I think the pension age is gonna keep going up and if I keep chucking money into the Cs black hole then there is always the possibility I don't get to enjoy it as long as I'd hope.
Id guess lobbing in the extra overpayments would defray it a bit but the fact is I think the pension age is gonna keep going up and if I keep chucking money into the Cs black hole then there is always the possibility I don't get to enjoy it as long as I'd hope.
Just stick the extra contributions in the Legal & General AVC fund that the Civil Service Scheme offers. That way it all still goes through the normal payroll deductions and you don’t have to set up a separate arrangement.
You can draw from the AVC fund any time after age 55 and don’t have to draw you main Civil Service pension at the same time.
You can draw from the AVC fund any time after age 55 and don’t have to draw you main Civil Service pension at the same time.
As previously stated, the L&G AVC is a sensible way to reduce your tax liability and offers the same flexibility as a private "Vanguard" SIPP. I persuaded my wife to contribute to the L&G AVC rather than put money nett into an ISA.
I have a National Govt pension and instead of paying extra in as salary sacrifice, I pay as much as I can into a private SIPP to reduce my 40% liability. I reckon that the Govt pension is the equivalent of very safe bonds and gilts, so with the SIPP I have mostly risky equities. If the stock market crashes then I live off the Govt pension and wait for equities to recover.
The disadvantage compared to salary sacrifice into the Govt pension is I have to pay management fees and the risk. The advantages are flexibility (post 55) and the potential for higher returns. All down to your appetite for risk.
My fundamental driver is to avoid paying 40% tax. Happy to not have savings and not pay extra off a mortgage even into retirement if there is a very large pension pot that I can decide what I do with.
I have a National Govt pension and instead of paying extra in as salary sacrifice, I pay as much as I can into a private SIPP to reduce my 40% liability. I reckon that the Govt pension is the equivalent of very safe bonds and gilts, so with the SIPP I have mostly risky equities. If the stock market crashes then I live off the Govt pension and wait for equities to recover.
The disadvantage compared to salary sacrifice into the Govt pension is I have to pay management fees and the risk. The advantages are flexibility (post 55) and the potential for higher returns. All down to your appetite for risk.
My fundamental driver is to avoid paying 40% tax. Happy to not have savings and not pay extra off a mortgage even into retirement if there is a very large pension pot that I can decide what I do with.
trickywoo said:
lauda said:
You can draw from the AVC fund any time after age 55 and don’t have to draw you main Civil Service pension at the same time.
Is that still going to be the case when even a private pension will be 57 and increasing? Gassing Station | Finance | Top of Page | What's New | My Stuff