Pensions, Advice please

Play the game you cad play the game.

Cad, and a bounder! I do not mind paying the tax, just wondered

You can't you khant, only 25 percent is tax free, the rest is taxed at whatever your nominal tax rate is at the time.

https://www.pensionsadvisoryservice.org.uk/

https://www.gov.uk/income-tax-rates

Is it a final salary pension, or a defined contribution pension?

It say Stakeholders Pension, it is from a company I used to work for, they paid in on my behalf

In simple terms, if you take 25% as cash and leave the 75% in vested, the 75% is marked as taxable for the future and you can't take another 25% tax free from it.

As far as taking everything ie 25% as tax free and 75% as taxable, you should be aware that the 75% is added to your income for the year, so you might well be taxed at 40% on it and in some cases numpties have been taxed at 45% (despite almost def being warned about this possibility).

Thanks

Stakeholder pensions are a form of defined contribution personal pension. They have low and flexible minimum contributions, capped charges and a default investment strategy if you don't want too much choice.

Some questions you should be finding the answers to
Are my options at retirement, to stay in the scheme or take the proceeds elsewhere.
If you can move (likely), what are the charges like compared to other options

Very few would take out an annuity these days, due to the low rates. Most will carry on investing & take some out each year.

https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/co...

Thanks Stow, I am 55 on Wednesday and can take it if I want, I dont need the money so may leave it , will look at the website you put up

all though firms take a dim view its legal if you don't need the money and the 25% is under 10 grand take it and reinves itt getting the 20,40% tax relief depending on your nominal tax rate

The 25% is under 10 grand, and I will stay at 20% tax so will take and put elsewhere, thank you all for the advice

Way I'd do it as lump sum then draw down as slow as possible to minimise the tax on it. If you aren't above 11k (all income) or whatever you'll pay no tax at all I'd have thought.

As you don't need the money, Deptford, you may wish to convert it to a Self Invested Personal Pension.
Two advantages accrue if you grow your investment:
1) You can take 25% tax-free over the lifetime of a SIPP, so potentially much more than £10,000 if you wait.
2) The rest is tax-free as a legacy.

You can currently earn £11850 free from tax together with a further £1000 interest tax free. Would imagine the personal allowance will go to at least £12000 in 19/20.

It's impossible to advise without knowing your personal circumstances.

There is no taxation differences at all between the stakeholder that he has and a sipp.  The only reason to transfer to a sipp would be to follow the strategy proposed by Just Checking, if the stakeholder didn't allow partial withdrawals.

I might take the lot and have it on one!!

Are you packing up work shortly? I'm 54 and not sure when to retire. Maybe 57-60. Could probably afford to go sooner, though I like my job & so am not in a massive hurry to go.

Im like you mate, enjoy my job, so will keep working, when I stop enjoying it, will pack up

what do you do... i never enjoy work 

imho, everyone needs to get clued up on investments.

I'm a nuclear magnetic resonance spectroscopist.

so am i 

My post was the absolute truth though.

bit like Homer Simpson

'I'm a nuclear magnetic resonance spectroscopist.'

Of course you are - nobody on this platform could invent a title like that! It reminds me of a student at my place of work (I'm retired now) who, when asked what his job was previously, said that his project at university was studying (and I quote) ....

'Leptogenesis and Decoherence in the Early Universe'! HA - beat that Stow_judge!

He gives you a gown ,when you go for a scan.

I used to work with a couple of Poles

But on the financial side of things, the 10 years leading up to my retirement, I concentrated more on putting my savings into stocks and shares ISA's rather than pensions. I do have private pensions (now moved into an Income Drawdown SIPP with Hargreaves Landsdown), but they are approximately only a third of the overall value of my total savings. The good thing about income from my ISA investments is that they don't even have to be mentioned on the annual tax return which makes it a whole lot easier to fill in!

The main advantage of pensions is that you get tax relief on contributions and also contributions from your employer in a workplace pension scheme, but conversely, you have to pay back the tax (over and above your annual tax allowance) when you retire. So the government gives you money on your pensions during your working life, but takes it away again after you retire!

Swings and roundabouts as they say!

Huge advantage of a sipp is that when you die it is not counted when assessing the value of your assets for inheritance tax purposes.In other words if you've got kids you can leave them the balance of your sipp tax free.

if you decide long term pension investment is the way forward, getting tax relief on the way in and that tax relief been invested in sed pension is hardly swings and roundabouts as compared to paying tax on the way out,imo

ISAs and pensions are taxwise basically repirocals of each other.
One you are taxed first but not when you take out (ISA)
One you are not taxed upfront but taxed when you take out (Pension).
But a pension you may also be able to avoid NI, which an ISA doesn't help with.
I'd say best plan is to get your pension up to the limit where, including state pension you will pay tax and then probably put rest into ISA
Because you'd hope any fund would increase with compound growth every year ... an ISA late on will gain less advantage as it won't grow much, you're not getting that much of an advtange, a pension you are avoiding tax when working when you are about to get it back quickly anyway without that tax. So even if it doesn't grow you get a good advantage late doors with a pension, you're hopefully quids in from day one.
So mokegibboni, I'm afraid unless I already had a large pension fund that I was going to get taxed on when I take it out, I'd stack as much as possible into a pension near retirement and make sure I got the correct rebates on it. Not paying tax on ISA growth isn't a great advatange if it hasn't grown much when you take it out.

if your getting a free £20 or £40 in every £100 invested for say 40 years and you don't think its a better investment than elsewhere surely you should be putting nothing into a pension, as you say up to 12 grandish a year your stii paying no tax

if young people starting out are maybe investing 3 grand a year into a pension,thats about 25 grand tax relief over a lifetime,you,d probably have to live 30 years plus after retirement to benefit from tax free investments

In a pension fund, growth is typically re-invested, so you're earning growth/dividends on an amount that would have otherwise gone to the tax man (the compounding effect). Plus of course when the pension can be accessed, under current legislation 25% can be taken free of tax. These factors give pensions the edge, however the drawback is that the funds can't be accessed (outside of extenuating circumstances) until you reach a certain age.
Therefore my approach is to have an accessible pot outside of pension restrictions (S&S ISA), various liquid cash pots to take advantage of RS and higher interest accounts, and the balance contributing to my pension fund (which is locked away).

One thing, being self employed, wish I'd started putting some away at an earlier age

https://www.moneyadviceservice.org.uk/en/tools/pension-calculator

Just had a go at this
Time to start the Georgie Best lifestyle so I don't make 65....

I'd have thought the Super Hans lifestyle would achieve a similar result!

Doubt he'd make 50
https://www.joe.co.uk/entertainment/super-hans-quotes-peep-show-110691

one might think not been able to get your sticky itchy fingers on your pot till your 55 is a positive not a negative, no dipping in for a fortnight in Ibiza etc

I'm 55 now & reckon I've got another 10 years of working @ least, unless I view my house as part of my pension plans & downsize, but me and the wife are happy where we are and I always viewed moving as, "if we want to" not because we have to.