SIPP & Pension guidance - IM Private Clients
Discussion
pingu393 said:
It gets even better if you are above state pension age as you will not have to pay NI on earnings.
(*) You will not earn any state pension credit if you earn less than the NI threshold.
Not sure if I follow all of that.....(*) You will not earn any state pension credit if you earn less than the NI threshold.
You don't pay any NI on a pension - state or private - age has nothing to do with it.
Carbon Sasquatch said:
pingu393 said:
It gets even better if you are above state pension age as you will not have to pay NI on earnings.
(*) You will not earn any state pension credit if you earn less than the NI threshold.
Not sure if I follow all of that.....(*) You will not earn any state pension credit if you earn less than the NI threshold.
You don't pay any NI on a pension - state or private - age has nothing to do with it.
FY upto year before State Pension Age
Earnings: you pay NI and Inc Tax
Pension: you pay Inc Tax
FY of State Pension Age and older
Earnings: you pay Inc Tax
Pension: you pay Inc Tax
Edited by pingu393 on Sunday 6th March 16:46
Increases in my DB pension (which is deferred since 2012) are capped at 5% per year for pension accrued up to April 2009 and 2.5% a year for pension accrued after this date.
Apparently, the increases are calculated using the pension revaluation order linked below.
https://www.legislation.gov.uk/uksi/2021/1308/made
How does the revaluation work when inflation is higher than 2.5% or 5% as it is now?
Is the cap each year or is it a capped compound annual growth for the whole revaluation period ie. since 2012 in my case?
In other words, is the real-terms value of my DB pension reducing due to inflation exceeding the cap?
Apparently, the increases are calculated using the pension revaluation order linked below.
https://www.legislation.gov.uk/uksi/2021/1308/made
How does the revaluation work when inflation is higher than 2.5% or 5% as it is now?
Is the cap each year or is it a capped compound annual growth for the whole revaluation period ie. since 2012 in my case?
In other words, is the real-terms value of my DB pension reducing due to inflation exceeding the cap?
Is there a specific name for the process where your employer pays their NI saving associated to your salary sacrifice contributions into your pension (as a top up)?
I understood that if I put 10k into my pension, employers don't pay the 13/15% NI on that amount (whereas they would've if I was paid). Some employer pass the saving on to the employee by topping up
I understood that if I put 10k into my pension, employers don't pay the 13/15% NI on that amount (whereas they would've if I was paid). Some employer pass the saving on to the employee by topping up
B9 said:
Is there a specific name for the process where your employer pays their NI saving associated to your salary sacrifice contributions into your pension (as a top up)?
I understood that if I put 10k into my pension, employers don't pay the 13/15% NI on that amount (whereas they would've if I was paid). Some employer pass the saving on to the employee by topping up
Mine splits it 50/50 with the employer.I understood that if I put 10k into my pension, employers don't pay the 13/15% NI on that amount (whereas they would've if I was paid). Some employer pass the saving on to the employee by topping up
Hi IM
Can I just ask a quick one (sorry if it has been covered already)
I am Scottish and currently the threshhold for 40% income tax in Scotland is £43,662 - I had assumed that when I start drawdown from my SIPP I would go up to £43,662 to avoid higher rate tax (ignore the tax free cash - am taking that separately)
But I read today somewhere that effectively the UK rates apply to SIPP drawdown and I could take up to £50,271 before hitting 40% - is that right please?
Cheers
Can I just ask a quick one (sorry if it has been covered already)
I am Scottish and currently the threshhold for 40% income tax in Scotland is £43,662 - I had assumed that when I start drawdown from my SIPP I would go up to £43,662 to avoid higher rate tax (ignore the tax free cash - am taking that separately)
But I read today somewhere that effectively the UK rates apply to SIPP drawdown and I could take up to £50,271 before hitting 40% - is that right please?
Cheers
Carbon Sasquatch said:
Whilst I don't know the Scotland vs England tax question - don't forget that the state pension counts towards the threshold too.
Thanks - yes a good point but am a fair bit away from that and am planning to reduce the SIPP drawdown when the state pension kicks in I need some advice please.
Despite having a pension since I was 18, it has only been the last few years (after houses, holidays and cars as a priority) that i have knuckled down and put some money in.
I have always been dubious of putting a lot of funds into things I dont understand as have always got burnt when I did, and now with the pension I am wondering if the only one who is benifitting is the broker.
My wife and i saw around 4% on the last 12 months, of which 2% was fees, and they have not exaclty been playing the market.
We are with Elevate.
Is this the sort of poor returns to expect in what has been an expanding market the last 12 months?
Not sure what to do as I know the smooth bugger in the suit we will me to not worry, and am on track.
Any pointers appreciated!
Despite having a pension since I was 18, it has only been the last few years (after houses, holidays and cars as a priority) that i have knuckled down and put some money in.
I have always been dubious of putting a lot of funds into things I dont understand as have always got burnt when I did, and now with the pension I am wondering if the only one who is benifitting is the broker.
My wife and i saw around 4% on the last 12 months, of which 2% was fees, and they have not exaclty been playing the market.
We are with Elevate.
Is this the sort of poor returns to expect in what has been an expanding market the last 12 months?
Not sure what to do as I know the smooth bugger in the suit we will me to not worry, and am on track.
Any pointers appreciated!
charge said:
I need some advice please.
Despite having a pension since I was 18, it has only been the last few years (after houses, holidays and cars as a priority) that i have knuckled down and put some money in.
I have always been dubious of putting a lot of funds into things I dont understand as have always got burnt when I did, and now with the pension I am wondering if the only one who is benifitting is the broker.
My wife and i saw around 4% on the last 12 months, of which 2% was fees, and they have not exaclty been playing the market.
We are with Elevate.
Is this the sort of poor returns to expect in what has been an expanding market the last 12 months?
Not sure what to do as I know the smooth bugger in the suit we will me to not worry, and am on track.
Any pointers appreciated!
2% sounds awfully high for not too active investment work when many funds can be self-managed for total cost of 0.45% (e.g. 0.22% fund management, 0.23% all in platform costs).Despite having a pension since I was 18, it has only been the last few years (after houses, holidays and cars as a priority) that i have knuckled down and put some money in.
I have always been dubious of putting a lot of funds into things I dont understand as have always got burnt when I did, and now with the pension I am wondering if the only one who is benifitting is the broker.
My wife and i saw around 4% on the last 12 months, of which 2% was fees, and they have not exaclty been playing the market.
We are with Elevate.
Is this the sort of poor returns to expect in what has been an expanding market the last 12 months?
Not sure what to do as I know the smooth bugger in the suit we will me to not worry, and am on track.
Any pointers appreciated!
Looking at performance based on one year and especially the last is a bit dubious. Consider the last five or ten years and compare to global tracker funds like Vanguard Life Strategy 100 (100% equity) or MSCI Global trackers, unless you have a lower risk portfolio.
charge said:
Not sure what to do as I know the smooth bugger in the suit we will me to not worry, and am on track.
Any pointers appreciated!
First of all, you need to understand that you were invested in & why.Any pointers appreciated!
What instructions did you provide regarding risk profile etc.
What are your aims ?
then try to tweak a few variables & say 'what if ?' - as much as anything to see how the advice changes (or not)
I just ask questions & insist that they use monetary values and not percentages - even though it's a quick calculation - I want to be able to say I paid £x for this & what did I get for my money. 1 or 2% sounds trivial, but it can be thousands of pounds which all of a sudden sounds a lot more serious - and is easier to question in terms of things like a day rate.
If they want to charge you 2% then make they do some work for it - and if you're not happy then move. People seem to accept a lot of crap in financial advice that they wouldn't with anything else. If you don't understand what you're paying for, then you shouldn't be paying it....
DibblyDobbler said:
Hi IM
Can I just ask a quick one (sorry if it has been covered already)
I am Scottish and currently the threshhold for 40% income tax in Scotland is £43,662 - I had assumed that when I start drawdown from my SIPP I would go up to £43,662 to avoid higher rate tax (ignore the tax free cash - am taking that separately)
But I read today somewhere that effectively the UK rates apply to SIPP drawdown and I could take up to £50,271 before hitting 40% - is that right please?
Cheers
Hi DibblyDobblerCan I just ask a quick one (sorry if it has been covered already)
I am Scottish and currently the threshhold for 40% income tax in Scotland is £43,662 - I had assumed that when I start drawdown from my SIPP I would go up to £43,662 to avoid higher rate tax (ignore the tax free cash - am taking that separately)
But I read today somewhere that effectively the UK rates apply to SIPP drawdown and I could take up to £50,271 before hitting 40% - is that right please?
Cheers
I believe that if you are living in Scotland when you draw your pension benefits then the Scottish income tax bands apply, so 41% tax kicks in at £43,663
Cheers
Nik
charge said:
I need some advice please.
Despite having a pension since I was 18, it has only been the last few years (after houses, holidays and cars as a priority) that i have knuckled down and put some money in.
I have always been dubious of putting a lot of funds into things I dont understand as have always got burnt when I did, and now with the pension I am wondering if the only one who is benifitting is the broker.
My wife and i saw around 4% on the last 12 months, of which 2% was fees, and they have not exaclty been playing the market.
We are with Elevate.
Is this the sort of poor returns to expect in what has been an expanding market the last 12 months?
Not sure what to do as I know the smooth bugger in the suit we will me to not worry, and am on track.
Any pointers appreciated!
Hi Charge (or is it?)Despite having a pension since I was 18, it has only been the last few years (after houses, holidays and cars as a priority) that i have knuckled down and put some money in.
I have always been dubious of putting a lot of funds into things I dont understand as have always got burnt when I did, and now with the pension I am wondering if the only one who is benifitting is the broker.
My wife and i saw around 4% on the last 12 months, of which 2% was fees, and they have not exaclty been playing the market.
We are with Elevate.
Is this the sort of poor returns to expect in what has been an expanding market the last 12 months?
Not sure what to do as I know the smooth bugger in the suit we will me to not worry, and am on track.
Any pointers appreciated!
It has been a strange 12 months in the investment world and while it has been possible to gain greater returns than 4% it has also been possible to return less and even lose over the same period.
It is the risk/reward and understanding where your money is that is probably the most important part of your plan.
For a 2% fee I would hope that your adviser is on hand to talk you through where your money is , why it is there and why it is appropriate for you. While, compared to the average,2% looks like a high charge ultimately only you can decide if you feel you are getting value for this.
I'm happy to take a look at what you have and pull a summary together for you so you can understand where you are and if that looks right for you.
Just drop me a message at nik.burrows@intelligentmoney.com if you need any help.
Regards
Nik
Intelligent Money said:
DibblyDobbler said:
Hi IM
Can I just ask a quick one (sorry if it has been covered already)
I am Scottish and currently the threshhold for 40% income tax in Scotland is £43,662 - I had assumed that when I start drawdown from my SIPP I would go up to £43,662 to avoid higher rate tax (ignore the tax free cash - am taking that separately)
But I read today somewhere that effectively the UK rates apply to SIPP drawdown and I could take up to £50,271 before hitting 40% - is that right please?
Cheers
Hi DibblyDobblerCan I just ask a quick one (sorry if it has been covered already)
I am Scottish and currently the threshhold for 40% income tax in Scotland is £43,662 - I had assumed that when I start drawdown from my SIPP I would go up to £43,662 to avoid higher rate tax (ignore the tax free cash - am taking that separately)
But I read today somewhere that effectively the UK rates apply to SIPP drawdown and I could take up to £50,271 before hitting 40% - is that right please?
Cheers
I believe that if you are living in Scotland when you draw your pension benefits then the Scottish income tax bands apply, so 41% tax kicks in at £43,663
Cheers
Nik
I knew the 40% band started lower in Scotland but had no idea by how much! Oh well - it will stop my withdrawing too much I suppose so not the end of the world
Nik, I would appreciate clarity on the issue of lifetime allowance
My DB scheme matured 18 months ago and I calculate the lifetime value as £615k made up as gross annual pension x 20 plus lump sum. I also have a SIPP, present value approx. £400k, I was not planning to draw from this for several years however I'm concerned that the combined value is approaching the lifetime allowance figure of £1,073,100.
Am I correct in thinking that that to keep within the lifetime allowance figure I will need to crystallize the SIPP and commence drawdown before the value gets to £460k? If so, if I commence drawdown for a nominal sum and the SIPP later grows beyond £460k will that leave me clear of falling into the higher tax status?
My DB scheme matured 18 months ago and I calculate the lifetime value as £615k made up as gross annual pension x 20 plus lump sum. I also have a SIPP, present value approx. £400k, I was not planning to draw from this for several years however I'm concerned that the combined value is approaching the lifetime allowance figure of £1,073,100.
Am I correct in thinking that that to keep within the lifetime allowance figure I will need to crystallize the SIPP and commence drawdown before the value gets to £460k? If so, if I commence drawdown for a nominal sum and the SIPP later grows beyond £460k will that leave me clear of falling into the higher tax status?
Keep it stiff said:
Am I correct in thinking that that to keep within the lifetime allowance figure I will need to crystallize the SIPP and commence drawdown before the value gets to £460k? If so, if I commence drawdown for a nominal sum and the SIPP later grows beyond £460k will that leave me clear of falling into the higher tax status?
As far as I understand it, your final LTA test will be at 75 and will include any growth still inside the SIPP.Therefore to avoid LTA, you'd crystallise your SIPP soon and take the tax free 25%. You don't actually need to draw down anything, crystallising is the LTA test. after that, you will know how much LTA headroom you have left. Then you know how much growth you can accommodate & how much you need to draw down.
That said - focussing on LTA may not always provide the best overall outcome - but I'm (roughly) in the same boat and seem to be fixated on staying below LTA.
Hopefully someone can help me.
I have a standard Nest pension, but I need to make a large pension contribution (30k+) in the next 2 weeks as part of a bonus scheme at work. I decided to take pension instead of salary. I have never paid more than legally required into my pension pot.
I am worried about the stock market taking a dive and affecting the pension in the next few months, Ideally i would 'park' the money and then put it into a scheme when I markets have settled a bit.
I have also been looking at getting a IM pension so I can put it into a specific fund. What should I do, put it in Nest in the short term and then move it? I only have 2 weeks to take it due outside factors.
I don't have any other savings, SIPPS etc.
I have a standard Nest pension, but I need to make a large pension contribution (30k+) in the next 2 weeks as part of a bonus scheme at work. I decided to take pension instead of salary. I have never paid more than legally required into my pension pot.
I am worried about the stock market taking a dive and affecting the pension in the next few months, Ideally i would 'park' the money and then put it into a scheme when I markets have settled a bit.
I have also been looking at getting a IM pension so I can put it into a specific fund. What should I do, put it in Nest in the short term and then move it? I only have 2 weeks to take it due outside factors.
I don't have any other savings, SIPPS etc.
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