Could you live on your pension?

[Cotty]

2 sMoKiN bArReLs said:

Speaking as one who is retired..

...it so easy to spend more money when you are not at work. Just nipping out for a coffee & a bun then a bit of lunch & there's £20 done which you probably wouldn't have spent if at work. If you are not careful this is half of your £1,000 per month before you've even thought of holidays etc.

It's expensive this doing nothing lark.

I rarely if ever eat out alone. Most of my lunches are business so im not paying. I don't drink coffee and make my own tea. I would be saving on buying suits, shirts etc plus not paying £166 train fare a month, although heating costs would be bigger. I really think its doable, my retired friend seems to cope and they eat out more than I do.

[soupdragon1]

anonymous said:

[redacted]

So are we saying 2 state pensions for a household and to try it for 1 month? Whats that, about £1300 or something for a couple? Its do-able I think, although I would need to remove mortgage costs, childcare costs etc as those costs won't exist for me (hopefully!) come retirement. £1,300 doesn't really go that far once fixed bills like council tax, insurance, car running costs, TV/broadband etc are removed from it though.

[Cotty]

soupdragon1 said:

£1,300 doesn't really go that far once fixed bills like council tax, insurance, car running costs, TV/broadband etc are removed from it though.

I suppose it depends on the size of your house and what your outgoings are. I have a small property that costs about £220 a month to run. Don't watch TV so no TV licence or Sky subscription. My BMW is on a classic policy and costs peanuts to run.

That would leave me over £1,000 for food and going out

[Defcon5]

My (public sector) pension is 99% of my current salary, so retiring will actually be a substantial pay rise, getting the state pension on top.

Assuming both the above will still exist in their current form by that time anyway.

[Dermot O'Logical]

Is the State pension counted as income for tax purposes?

For example, if one has an occupational pension which brings in £11k per annum, there would be no tax liability, but when the State pension kicks in as well, does "the system" recognise that your income has risen above the 0% tax threshold and start deducting tax?

[HoHoHo]

Dermot O'Logical said:

Is the State pension counted as income for tax purposes?

For example, if one has an occupational pension which brings in £11k per annum, there would be no tax liability, but when the State pension kicks in as well, does "the system" recognise that your income has risen above the 0% tax threshold and start deducting tax?

I might be incorrect however my understanding of the UK tax laws state if you earn over 'X' which is above the agreed no tax limit you will pay income tax - should that be pension or whatever it doesn't matter, it;s simply all about level of income.

Of course winning the lottery doesn't count until you invest the money at which point you may be taxed on income from any earnings taking you into the next threshold.

I'm happy to be corrected

[Red 4]

Defcon5 said:

My (public sector) pension is 99% of my current salary, so retiring will actually be a substantial pay rise, getting the state pension on top.

Assuming both the above will still exist in their current form by that time anyway.

What scheme is that if you don't mind me asking ?

I appreciate you won't pay N.I. on your pension and obviously you won't be making pension contributions from your salary but 99% of your pay as a pension ? Really ?

[Defcon5]

Red 4 said:

What scheme is that if you don't mind me asking ?

I appreciate you won't pay N.I. on your pension and obviously you won't be making pension contributions from your salary but 99% of your pay as a pension ? Really ?

LGPS, I’ll have 49 years in by 68, and it’s a 1/49 accrual rate. Both amounts are gross

[The Leaper]

Defcon5 said:

LGPS, I’ll have 49 years in by 68, and it’s a 1/49 accrual rate. Both amounts are gross

The LGPS may say it provides 1/49th per year but will also include a provision that the maximum is 2/3 "final remuneration". All UK pension schemes have this as a maximum limit and cannot provide more; if they did the whole scheme would lose its tax concessions. In your case after 33 years at the accrual rate of 1/49 you will be in danger of reaching this maximum so your pension will be restricted. Your contributions will continue however so that your pension will relate to final remuneration at the time you retire. I suggest that you contact the scheme administrators and check this out with them.

There are other tax provisions that may also impact on your expectations eg the lifetime allowance etc.


R.

[Defcon5]

The Leaper said:

The LGPS may say it provides 1/49th per year but will also include a provision that the maximum is 2/3 "final remuneration". All UK pension schemes have this as a maximum limit and cannot provide more; if they did the whole scheme would lose its tax concessions. In your case after 33 years at the accrual rate of 1/49 you will be in danger of reaching this maximum so your pension will be restricted. Your contributions will continue however so that your pension will relate to final remuneration at the time you retire. I suggest that you contact the scheme administrators and check this out with them.

There are other tax provisions that may also impact on your expectations eg the lifetime allowance etc.


R.

This is what they sent me, based on my current 36k salary

[The Leaper]

I stand corrected.

R.

[The Leaper]

I stand corrected.

R.

[Dermot O'Logical]

HoHoHo said:

Dermot O'Logical said:

Is the State pension counted as income for tax purposes?

For example, if one has an occupational pension which brings in £11k per annum, there would be no tax liability, but when the State pension kicks in as well, does "the system" recognise that your income has risen above the 0% tax threshold and start deducting tax?

I might be incorrect however my understanding of the UK tax laws state if you earn over 'X' which is above the agreed no tax limit you will pay income tax - should that be pension or whatever it doesn't matter, it;s simply all about level of income.

Of course winning the lottery doesn't count until you invest the money at which point you may be taxed on income from any earnings taking you into the next threshold.

I'm happy to be corrected

Thanks for the reply. I had a feeling that might be the case - we're in Britain, after all. Spend a lifetime working and providing for your retirement, the Government will make sure that they get some of it. Spend a lifetime sitting on your arse at the taxpayer's expense, don't pay any tax or NI, claim the State pension as a right.

[dav123a]

Can't claim a state pension if you've never paid NI.

[Jimmy Recard]

dav123a said:

Can't claim a state pension if you've never paid NI.

Child benefit and/or dole make your NI contributions, don't they?

[dav123a]

Pretty sure they don't , but some might claim pension credits.

[CaptainSlow]

Jimmy Recard said:

dav123a said:

Can't claim a state pension if you've never paid NI.

Child benefit and/or dole make your NI contributions, don't they?

Yes, dav is incorrect.

eta Child Benefit or unable to work through illness you can get NI credits that mean you can claim a state pension.

Edited by CaptainSlow on Thursday 4th October 19:47

[eliot]

The big looming black hole that is going to increase over the next 30 years is all the people who are renting their house . Round my way a three bed house rents for £900 a month - how is someone going to live of a pension and pay rent - let alone eat.

[SAS Tom]

eliot said:

The big looming black hole that is going to increase over the next 30 years is all the people who are renting their house . Round my way a three bed house rents for £900 a month - how is someone going to live of a pension and pay rent - let alone eat.

I would have thought that for many they will inherit their parents house and live there or sell it and get their own place. Not everyone obviously but the people that own houses won’t be around forever.

[NickCQ]

SAS Tom said:

I would have thought that for many they will inherit their parents house and live there or sell it and get their own place. Not everyone obviously but the people that own houses won’t be around forever.

I would imagine means-tested care home fees and Corbyn's inheritance taxes will give a lot of people relying on that approach a big shock.