SIPP & Pension guidance - IM Private Clients

[SteveStrange]

V8covin said:

JapanRed said:

Hi Intelligent Money, and others if they can help.

I’m wondering whether there is an easy way to see if me and my wife have any long lost pensions. They won’t be worth much but we both had weekend jobs between the ages of 16 and 21 whilst we were at college/uni.

I’m specifically thinking Matalan, Halifax bank, and the Post office.

Is it worthwhile transferring these pensions (if it transpires that we have them) into our IM SIPP’s?

Thanks.
Rob

Www.pensiontracingservice.com

I take it that's a privately-run business? Is that a decent service, or do they give you the hard sell before they give you any information?

[mikeiow]

SteveStrange said:

V8covin said:

JapanRed said:

Hi Intelligent Money, and others if they can help.

I’m wondering whether there is an easy way to see if me and my wife have any long lost pensions. They won’t be worth much but we both had weekend jobs between the ages of 16 and 21 whilst we were at college/uni.

I’m specifically thinking Matalan, Halifax bank, and the Post office.

Is it worthwhile transferring these pensions (if it transpires that we have them) into our IM SIPP’s?

Thanks.
Rob

Www.pensiontracingservice.com

I take it that's a privately-run business? Is that a decent service, or do they give you the hard sell before they give you any information?

I never realised it wasn't Government run.....
They compare themselves with the gov one at https://www.pensiontracingservice.com/compare
I guess you could start at https://www.gov.uk/find-pension-contact-details first?

More at https://www.moneyhelper.org.uk/en/pensions-and-ret...

[V8covin]

mikeiow said:

I never realised it wasn't Government run.....
They compare themselves with the gov one at https://www.pensiontracingservice.com/compare
I guess you could start at https://www.gov.uk/find-pension-contact-details first?

More at https://www.moneyhelper.org.uk/en/pensions-and-ret...

It's free to use but I don't know how pushy they get to sell their services furher down the line

[i4got]

Looking for some advice.

Just about to turn 60 and am entitled to a small final salary civil service pension, for which I am filling in the paperwork.

In addition I have two SIPPS - one with IM and one with another provider. I have had one small withdrawal from the other provider (1.55% of LTA)

On my CS application for I have to provide details around LTA.

One question asks for an estimate of the expected LTA which will be used by the two SIPPS and asks for statements from the providers. I assume this will be simply the current valuation?

It then asks me to chose the order in which the 3 pensions should be treated for LTA purposes. It says this will decide which scheme will be responsible for settling any tax liability.

My situation regarding LTA is very borderline. I have no protected entitlement in place.

If I add together my one withdrawal, both SIPP current valuations, and 25 times the annual civil service pension, the total is currently very marginally below the LTA allowance.

What criteria should I be taking into account in choosing the order of the 3 pensions for potential LTA purposes. Also any idea whether it's the first or last of the three that is responsible for any tax?

I will also be trying to get answers on this from the civil service pension administrator but expect that may be a long drawn out process.

Thanks.

[foiled]

For defined benefit scheme your “pot” is x20 your annual pension, not x25, so you might have more lta to play with

[i4got]

foiled said:

For defined benefit scheme your “pot” is x20 your annual pension, not x25, so you might have more lta to play with

Thanks that is useful to know.

[Intelligent Money]

i4got said:

foiled said:

For defined benefit scheme your “pot” is x20 your annual pension, not x25, so you might have more lta to play with

Thanks that is useful to know.

Hi i4got

The LTA calculation for your pot is likely to be 20x pension + any lump sum but will be confirmed by the trustees/administers

The LTA is usually paid by the scheme that takes you over the LTA when you crystallise it. No LTA is due until you have crystallised your pots over the LTA limit.

Cheers

Nik

[mikeiow]

Intelligent Money said:

i4got said:

foiled said:

For defined benefit scheme your “pot” is x20 your annual pension, not x25, so you might have more lta to play with

Thanks that is useful to know.

Hi i4got

The LTA calculation for your pot is likely to be 20x pension + any lump sum but will be confirmed by the trustees/administers

The LTA is usually paid by the scheme that takes you over the LTA when you crystallise it. No LTA is due until you have crystallised your pots over the LTA limit.

Cheers

Nik

If you feel things are "improving", & that your DC schemes might rise over the next few years, you could consider crystallising those, & thus removing them from the LTA issue. (remember there is another LTA test at age 75).

That would give you 25% of the value today - you could then chose to invest that in ISA (to 20K pa, £40k for a couple) & other savings accounts. Or wine, women & fast cars, etc
The 'downside' is to be aware that whilst you have the money in the DC pension, it is outside the estate for IHT purposes....

[i4got]

mikeiow said:

If you feel things are "improving", & that your DC schemes might rise over the next few years, you could consider crystallising those, & thus removing them from the LTA issue. (remember there is another LTA test at age 75).

That would give you 25% of the value today - you could then chose to invest that in ISA (to 20K pa, £40k for a couple) & other savings accounts. Or wine, women & fast cars, etc
The 'downside' is to be aware that whilst you have the money in the DC pension, it is outside the estate for IHT purposes....

That is interesting - I hadn't thought of that. Wasn't actually planning on touching the DC pensions for now but that it certainly worth a bit of analysis.

[OldSkoolRS]

I have a DC pension with the company I retired from in May this year. I'm currently living off savings and a modest, but tax free, ex-Navy pension. The rule with our company pension is that you have to give them a year's notice to start taking it, which is currently set to my 60th birthday in just over 3 years time. If I want to start taking it next December I'd have to let them know before my birthday later this month.

However, if I was to move it to another provider could I start taking it sooner, such as next summer? Does it have to be geared around your birthday?

If it helps the current provider is Scottish Widows, who don't charge for transferring out from them.

Also: Assuming I take the 25% TFLS from this pension when it starts, can I split the remaining 75% into drawdown and an annuity (either 10 year or lifetime), or does the 75% have to be one or the other?

I only need this DC pension to see me through to state pension age (10 years time), so any remaining beyond that is a bonus as I'll have my tax free Navy pension, plus a very small DB pension that I'm starting this December, plus savings to earn interest off/dip into as required.

[Mazinbrum]

i4got said:

mikeiow said:

If you feel things are "improving", & that your DC schemes might rise over the next few years, you could consider crystallising those, & thus removing them from the LTA issue. (remember there is another LTA test at age 75).

That would give you 25% of the value today - you could then chose to invest that in ISA (to 20K pa, £40k for a couple) & other savings accounts. Or wine, women & fast cars, etc
The 'downside' is to be aware that whilst you have the money in the DC pension, it is outside the estate for IHT purposes....

That is interesting - I hadn't thought of that. Wasn't actually planning on touching the DC pensions for now but that it certainly worth a bit of analysis.

You can crystallise it and leave it within your SIPP still.

[Intelligent Money]

OldSkoolRS said:

I have a DC pension with the company I retired from in May this year. I'm currently living off savings and a modest, but tax free, ex-Navy pension. The rule with our company pension is that you have to give them a year's notice to start taking it, which is currently set to my 60th birthday in just over 3 years time. If I want to start taking it next December I'd have to let them know before my birthday later this month.

However, if I was to move it to another provider could I start taking it sooner, such as next summer? Does it have to be geared around your birthday?

If it helps the current provider is Scottish Widows, who don't charge for transferring out from them.

Also: Assuming I take the 25% TFLS from this pension when it starts, can I split the remaining 75% into drawdown and an annuity (either 10 year or lifetime), or does the 75% have to be one or the other?

I only need this DC pension to see me through to state pension age (10 years time), so any remaining beyond that is a bonus as I'll have my tax free Navy pension, plus a very small DB pension that I'm starting this December, plus savings to earn interest off/dip into as required.

Hi OldSkoolRS

My apologies for the delay in replying.

Assuming that there are no transfer our restriction on you pot, you can switch to another provider and start drawing benefits at any point after your 55th birthday, so as soon as you like in your case.

You can split the "income" portion of the pot into drawdown and annuity if you wish and don't have to crystallise the whole pot in one go, so can draw a tax free cash element each year rather than all at outset to allow you to take an income more tax efficiently if you don't need a tax free lump sum at outset.

I'm happy to go through the options linked to your situation if that would help, just drop me a message at [e-mail]

Cheers

Nik

[mikeiow]

Mazinbrum said:

i4got said:

mikeiow said:

If you feel things are "improving", & that your DC schemes might rise over the next few years, you could consider crystallising those, & thus removing them from the LTA issue. (remember there is another LTA test at age 75).

That would give you 25% of the value today - you could then chose to invest that in ISA (to 20K pa, £40k for a couple) & other savings accounts. Or wine, women & fast cars, etc
The 'downside' is to be aware that whilst you have the money in the DC pension, it is outside the estate for IHT purposes....

That is interesting - I hadn't thought of that. Wasn't actually planning on touching the DC pensions for now but that it certainly worth a bit of analysis.

You can crystallise it and leave it within your SIPP still.

Depending on the provider.
My Aviva pot would only let me take up to the 25% as cash….but given how the pension industry has thrived on mergers & acquisitions, other Aviva pension holders may be able to do what you suggest!

[OldSkoolRS]

Intelligent Money said:

Hi OldSkoolRS

My apologies for the delay in replying.

Assuming that there are no transfer our restriction on you pot, you can switch to another provider and start drawing benefits at any point after your 55th birthday, so as soon as you like in your case.

You can split the "income" portion of the pot into drawdown and annuity if you wish and don't have to crystallise the whole pot in one go, so can draw a tax free cash element each year rather than all at outset to allow you to take an income more tax efficiently if you don't need a tax free lump sum at outset.

I'm happy to go through the options linked to your situation if that would help, just drop me a message at [e-mail]

Cheers

Nik

Thanks Nik, good to know my options are as I'd hoped. Tax won't be an issue until I reach SP age so I plan to take the TFLS at the start. I'll drop you a message later thanks.

[Countdown]

Apologies if this has already been asked.

Is my understanding correct?

By opening a SIPP for every £60 I pay in I'll get another £40 back in tax relief. The SIPP provider will claim back 20%, I need to claim back the other 20% via my Self Assessment Return

Also - Vanguard SIPP appears to be the lowest cost, the only downside is that you can only invest in Vanguard Funds as opposed to individual stocks and shares. Are there any other downsides of choosing Vanguard

Thanks and apologies if noob questions

[supersport]

[quote=Countdown]Apologies if this has already been asked.

Is my understanding correct?

By opening a SIPP for every £60 I pay in I'll get another £40 back in tax relief. The SIPP provider will claim back 20%, I need to claim back the other 20% via my Self Assessment Return

Also - Vanguard SIPP appears to be the lowest cost, the only downside is that you can only invest in Vanguard Funds as opposed to individual stocks and shares. Are there any other downsides of choosing Vanguard

Thanks and apologies if noob questions [/quote


Assuming you are a higher rate tax payer yes. But you’ll get £30 back not £40.

[Countdown]

supersport said:

Assuming you are a higher rate tax payer yes. But you’ll get £30 back not £40.

Assuming I get paid £100, and pay £40 in tax. I assumed that if I paid the £60 into my SIPP then the provider would reclaim £20 (which is added to my pot) and i would reclaim £20 via my self assessment form?

[Countdown]

Another two noob question.....

Question 1- Lifetime Allowance
Let's say I have 2 DB pensions, which will pay a pension of £40k at the age of 65. How do i estimate how close I am to the LTA threshold (in order to avoid exceeding it by investing in a SIPP?

Question 2 - Annual Allowance
Person A has pensionable earnings of £90k. he pays 10% into a DB scheme, His employer pays in 20% (so that makes £27k in total). I assume person A can pay £13k into a SIPP because of the £40k annual limit

[alscar]

Iirc i think prior to working out how close I might be to the LTA applicable limit at the time I just multiplied the last known " current " Pension earnt to date as a pot by a factor of 20.
I don't think I multiplied your suggested final amount by 20 to take an average but that might depend on how close to retirement you are as well.
Of course it may have changed in which case Ive been zero help.

[Intelligent Money]

Countdown said:

Another two noob question.....

Question 1- Lifetime Allowance
Let's say I have 2 DB pensions, which will pay a pension of £40k at the age of 65. How do i estimate how close I am to the LTA threshold (in order to avoid exceeding it by investing in a SIPP?

Question 2 - Annual Allowance
Person A has pensionable earnings of £90k. he pays 10% into a DB scheme, His employer pays in 20% (so that makes £27k in total). I assume person A can pay £13k into a SIPP because of the £40k annual limit

Hi Countdown,

Qu1
The lifetime allowance calculation for your DB scheme is likely to be 20X the pension + any lump sum payable, the most accurate way to confirm this is to get an LTA calculation from the trustee.

Qu2
The annual contribution calculation for a DB scheme is based on the "accrual" in that year, i.e. how much the pension increased by, not how much was paid in.
It its a bit of a convoluted calculation based on a 16:1 ratio, again the best way to be clear is to ask the trustees for the "pension input" for a given tax year.

Cheers

Nik