Chit Chat
There is currently 1 person viewing this thread.
Hi,
There is voluntary redundancies in our office shortly, if I take the redundancy my offer would be around 50k, I have asked the pensions people can I take a 30k payoff and put the other 20k into my pension fund, they said I cannot pay it into my company pension but I can pay it into an AVC which I would need to set up asap as I do not have one at the present time.
I am 54 in August and plan to take my pension at 55, what would happen to the AVC I am about start up? could I take it all tax free in a lump sum when I get to 55?
Any advice would be most helpful as I don't fancy paying 40% tax in anything over 30k redundancy.
There is voluntary redundancies in our office shortly, if I take the redundancy my offer would be around 50k, I have asked the pensions people can I take a 30k payoff and put the other 20k into my pension fund, they said I cannot pay it into my company pension but I can pay it into an AVC which I would need to set up asap as I do not have one at the present time.
I am 54 in August and plan to take my pension at 55, what would happen to the AVC I am about start up? could I take it all tax free in a lump sum when I get to 55?
Any advice would be most helpful as I don't fancy paying 40% tax in anything over 30k redundancy.
sort by:
Show
per page
Replies: 19
|
By:
You're in luck, everyone's an expert on here!
 I hope you get your answer, you never know  |
|
By:
nice retirement age well done
best of luck |
|
By:
Hi W11
I passed this on to my mate who is a retired pension expert having worked in the Civil Service, local government and Lloyds TSB. This was his reply: Hiya Mister B. Hmmm I'm rusty on this. Basically, sounds about right with AVC .... BUT, the £50k will still need to be taxed first! The company may be obliged to deduct tax at source under current tax rules (I am no longer familiar with these). Another thing though, one can only pay into an AVC while working so the £20k would not have been received in time. Could pay into a FSAVC in the same year though, I believe. Then he would get back the tax paid on that at tax rate for that year, it's claimed back by investment Co and forms part of the FSAVC. IF possible negotiate for a leaving date soon after 6 April so if out of work for most of that new tax year then earnings (inc the £20k) may not fall into the 40% bracket. (pretend not to speak English and go wash cars for a year for cash!). At one time I believe tax man frowned upon immediate reinvestment of termination monies into pension plans. It can get complicated so advice will really be needed from a current expert. AVCs can only be drawn as 25% cash, the rest paid as an Annuity. A very small annuity would be paid however at age 55 and investment not having grown. Could be less due to set up fees! New tax rules coming on small amounts but he will already have a company pension to be taken into account. Some pointers only off top of head over porridge. Cheers Hope you can make some sense of that, I gave up at FSAVC  |
|
By:
redundancy pay is tax free,from an idiot if that helps,
|
|
By:
so all those advising you at work want sacking ,unless your telling the odd porkie pie,
|
|
By:
depends on whether it is redundancy or, more likely, VER, which is taxable
|
|
By:
he said redundancy , its his redundancy ,his question if he doesnt no or as i suggest telling porkies, he should do one
|
|
By:
in my experience people often (incorrectly) use the terms interchangeably, doesn't sound like the OP is telling porkies
|
|
By:
Only the first £30k of redundnacy pay is tax free, which is what the OP says.
https://www.gov.uk/redundant-your-rights/redundancy-pay And as MisterBadger says, not all redundancy pay is redundancy pay. |
|
By:
I suggest that you set one up and pay money into it before you stop working. If you can get your company to pay it directly, they might be able to pay it before tax is taken off. If you pay it separately, they will still refund the tax.
I started at the company I work for now ca. 5 years ago and started a SIPP. When I pay into it, the government return the tax shortly after (The 20%) without you having to inform them. If you are a 40% tax payer, the additional re-claim of tax needs to be done on your tax form. Take a close look at the costs involved, they all want their cut! http://www.youinvest.co.uk/SIPP/Offer/ http://www.youinvest.co.uk/Sipp/ChargesandRates/ |
|
By:
The tax free part you can withdraw is 25% of the total pot. I guess this can get quite complex if you had some in a final salary pension, and other funds in various money purchase schemes.
https://www.gov.uk/tax-on-pension In my view, you should carry on investing into your retirement and draw what you need annually. |
|
By:
stow,doesnt all that 25% nonsense change in april?
|
|
By:
Yes, you can either take the 25% in one lump sum, or in a number of lump sums.
http://www.theguardian.com/money/2014/oct/14/uk-pension-reforms-what-mean |
|
By:
Of course, you also still have your personal allowance in retirement.
http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/pensioners/reducing-allowances.htm https://www.moneyadviceservice.org.uk/en/articles/age-related-personal-allowances |
|
By:
tax relief is great obviously but only those retiring early and been able to manage currently on 10,000 see any real benefit,
anyone waiting till retirement age getting between 8 and 10 grand pension , is going to pay tax on most of his pension on the way out,obviously if the pension does well you,ll be getting more money invested but obviously if pensions suffer you,ll be hit harder if all your eggs are in the pension basket plus any charges, its obviously worth it for people who are bordering on the 40 p tax band to put any bonus,s pay rises into a pension fund as a pension sacrifice to keep you under the 40p rate plus the tax relief |
|
By:
all that seems pretty obvious.
|
|
By:
If your company matches some of your contributions or refunds the company NI on your pension contributions it can be very worthwhile. I agree with your sentiment of "all eggs in one basket" as tax rules can change, as can your state pension age! If you are able, I think it's worth having some savings in ISAs as well as a pension.
|
|
By:
OP, you need to speak to your company pension administrator as a lot depends on the scheme rules,
If its a Final Salary scheme with an associated AVC scheme some allow you to use the value of the final salary scheme to qualify towards the 25% tax free lump sum ( TFLS) which can be taken from the AVC scheme without affecting your final salary scheme, I cant recall exactly but its usually 20 or 25 time your final salary pension amount (I will use 20) So, if you have qualified a Final Salary pension of 15K pa its notional value (15 x 20) = 300k which would allow you a TFLS of 75K So, if you had 100K that you can put in the AVC scheme you could get all of that out tax free (thats 25% of the AVC money plus the 75K that you qualified for from the Final Salary scheme) All money paid into the company AVC scheme is taken from Gross payments so no messing about with scheme administrators reclaiming tax. If your scheme is set up in this way and you dont need the cash I would stick in all monies including salary that you would be taxed on prior too redundancy. |
|
By:
BTW I am no pension expert but this is the way my company scheme works
|