Do I need divorce - for tax reasons
Discussion
Been doing some rough calculations and I appear close to the lifetime pension allowance (3 final salary schemes plus some hefty DC contributions. One of the DB schemes is appreciating at 6% pa as I am over pension age (60) and not drawing it.
Now my current contributions are matched by my employer so for every £100 I get £200 in the scheme and by not contributing I would pay 40% tax leaving me with £60 in hand rather than £200 in the scheme but . . . . . If I slip over the allowance I will pay 55% plus income tax on lump sums or 25% plus income tax on pension from the surplus (No wonder Doctors retire early). She isn't working so there is no tax benefit in making contributions into her schemes and we lose the employer contribution.
If we divorce all the schemes get split 50:50 and if we then remarry neither of us will be anywhere near the lifetime allowance as the schemes don't re-combine . . . . .
Comments?
Granted if we make it to 60 years "together" we won't get a card from the Queen as it won't be continuous service.
Should LTA be transferrable within couples to avoid this issue?
Now my current contributions are matched by my employer so for every £100 I get £200 in the scheme and by not contributing I would pay 40% tax leaving me with £60 in hand rather than £200 in the scheme but . . . . . If I slip over the allowance I will pay 55% plus income tax on lump sums or 25% plus income tax on pension from the surplus (No wonder Doctors retire early). She isn't working so there is no tax benefit in making contributions into her schemes and we lose the employer contribution.
If we divorce all the schemes get split 50:50 and if we then remarry neither of us will be anywhere near the lifetime allowance as the schemes don't re-combine . . . . .
Comments?
Granted if we make it to 60 years "together" we won't get a card from the Queen as it won't be continuous service.
Should LTA be transferrable within couples to avoid this issue?
Checked the numbers last night and looks like I will reach 95% by planned retirement so I don't need to ask her, yet!
Now if I had worked for the same company for 40 years and half of that had been final salary I would be over the allowance . . is that the people they really want to hit with this?
Now if I had worked for the same company for 40 years and half of that had been final salary I would be over the allowance . . is that the people they really want to hit with this?
And I thought I was the only old romantic on here 
Taking it further - it also allows you to use both tax allowances for drawing the pension in future.
I have a non working wife with a v v small pension - so really just the state pension from 67 & would love to be able to transfer some over to her & use her tax free allowance from 55.
I might be sleeping in the spare room tonight......
Taking it further - it also allows you to use both tax allowances for drawing the pension in future.
I have a non working wife with a v v small pension - so really just the state pension from 67 & would love to be able to transfer some over to her & use her tax free allowance from 55.
I might be sleeping in the spare room tonight......
IJWS15 said:
Checked the numbers last night and looks like I will reach 95% by planned retirement so I don't need to ask her, yet!
Now if I had worked for the same company for 40 years and half of that had been final salary I would be over the allowance . . is that the people they really want to hit with this?
In answer to the last question - yes it is.Now if I had worked for the same company for 40 years and half of that had been final salary I would be over the allowance . . is that the people they really want to hit with this?
Most people will have zero sympathy and will be searching for the world's smallest violin etc.
Paying her - or her pension from my net salary doesn't really buy me much.
Sadly, I don't think my employer would play along either.
Divorce & remarriage does look like a loophole though. Last time I suggested it was when our son was applying for University but we didn't follow through....
Sadly, I don't think my employer would play along either.
Divorce & remarriage does look like a loophole though. Last time I suggested it was when our son was applying for University but we didn't follow through....
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