Pension planning for my Mrs
Discussion
Looking for a bit of advice on pension planning for my Mrs ………….
I am married, retired, no kids, no debts and my income (pensions/dividends/interest) covers all the household/cars/holiday bills completely, no income required from Mrs to maintain our current lifestyle.
My Mrs will be 54 this March so before the end of this tax year. She currently works 4 days a week and earns around £31k gross in round figures and that is unlikely to increase by much.
She wants to work until 60 and then retire, although her state pension age is currently set to start at 67. She doesn’t have all the qualifying years as yet but regardless of when she retires we will top up any years she is short, so assume she will be getting the full state pension whatever happens.
Premium bonds and ISA allowances all used up and I will continue to do that each year regardless, so not affected by this plan.
So our thinking is to over the next 6 years to pay money into a separate pension plan of some sort, at 60 buy an annuity with that PP that provides an income in the gap to 67 after which her state pension will take over making use of her tax allowance for those 7 non earning years. She currently has no pension plan other than the one her employer is required to provide.
She may change employer at any time so whatever the plan it is it needs to not involve her employers, it is going to be funded by all or some of her wages. If there are any tax advantages in going over her salary no problem I can top it up from savings, it is just a question of what is best for us financially in the long term.
Any thoughts on the overall plan and any input regarding pension changes after this tax year much appreciated.
I am married, retired, no kids, no debts and my income (pensions/dividends/interest) covers all the household/cars/holiday bills completely, no income required from Mrs to maintain our current lifestyle.
My Mrs will be 54 this March so before the end of this tax year. She currently works 4 days a week and earns around £31k gross in round figures and that is unlikely to increase by much.
She wants to work until 60 and then retire, although her state pension age is currently set to start at 67. She doesn’t have all the qualifying years as yet but regardless of when she retires we will top up any years she is short, so assume she will be getting the full state pension whatever happens.
Premium bonds and ISA allowances all used up and I will continue to do that each year regardless, so not affected by this plan.
So our thinking is to over the next 6 years to pay money into a separate pension plan of some sort, at 60 buy an annuity with that PP that provides an income in the gap to 67 after which her state pension will take over making use of her tax allowance for those 7 non earning years. She currently has no pension plan other than the one her employer is required to provide.
She may change employer at any time so whatever the plan it is it needs to not involve her employers, it is going to be funded by all or some of her wages. If there are any tax advantages in going over her salary no problem I can top it up from savings, it is just a question of what is best for us financially in the long term.
Any thoughts on the overall plan and any input regarding pension changes after this tax year much appreciated.
She could just stick all earnings above the tax free allowance in to a pension, then draw it down as required from 60 - no need for any annuity.
Anything left from tax free allowance could be put in to an isa.
You ve 6 years to save for 7 years, of you can live on your income as suggested.
On a tangent, if your income is sufficient to cover everything why doesn’t she also retire early?
Anything left from tax free allowance could be put in to an isa.
You ve 6 years to save for 7 years, of you can live on your income as suggested.
On a tangent, if your income is sufficient to cover everything why doesn’t she also retire early?
PabloEscortCar said:
She doesn't have all the qualifying years as yet but regardless of when she retires we will top up any years she is short, so assume she will be getting the full state pension whatever happens.
Steady on cowboy, I think they're talking about restricting the buying of additional years. Do your own research asap. Link to current situation here,https://www.moneysavingexpert.com/pensions/volunta...
PabloEscortCar said:
Premium bonds and ISA allowances all used up and I will continue to do that each year regardless, so not affected by this plan.
Premium Bonds are IMO garbage, but each to their own.PabloEscortCar said:
She currently has no pension plan other than the one her employer is required to provide.
My guess is you'd be massively better off buying max pension in her name than faffing about with Premium Bonds. I anticipate you're already aware pension contributions could be 100% of her income (capped at £60k).In all seriousness, your situation might be one for getting decent advice from an IFA. Otherwise just stick with this forum, do your own homework and save yourself a wedge.
If the option remains I wouldn't buy back the missed NI years to max the SP until she is 66. My wife is a few years short as she gave up work 30yrs ago. I said I'll look at it the year before she can draw it as you never know 
Paying it now you lose the cash option to invest, granted it's not much but once it's gone it's gone.
Paying it now you lose the cash option to invest, granted it's not much but once it's gone it's gone.
Panamax said:
PabloEscortCar said:
She doesn't have all the qualifying years as yet but regardless of when she retires we will top up any years she is short, so assume she will be getting the full state pension whatever happens.
Steady on cowboy, I think they're talking about restricting the buying of additional years. Do your own research asap. Link to current situation here,https://www.moneysavingexpert.com/pensions/volunta...
PabloEscortCar said:
Premium bonds and ISA allowances all used up and I will continue to do that each year regardless, so not affected by this plan.
Premium Bonds are IMO garbage, but each to their own.PabloEscortCar said:
She currently has no pension plan other than the one her employer is required to provide.
My guess is you'd be massively better off buying max pension in her name than faffing about with Premium Bonds. I anticipate you're already aware pension contributions could be 100% of her income (capped at £60k).In all seriousness, your situation might be one for getting decent advice from an IFA. Otherwise just stick with this forum, do your own homework and save yourself a wedge.
We have had Premium Bonds for 12 years, I have noted all the wins and overall, given the tax free nature we have no complaints. The rates are dropping generally everywhere so things may change, that can be reviewed any time. They also have the advantage of having access to £100k at short notice if the need arises.
Pension wise to get all the tax benefits my understanding is as well as the £60k cap isn't there also the annual salary cap? So around half that in her case, less whatever her employer has/will pay in.
What I am really aiming at doing is using up her unused taxable allowance between retirement and the state pension kicking in, I don't think there is enough to be saved for such a small amount to justify a IFA.
The problem with doing any planning of this nature is that the rules keep changing, but making some effort has to be better than no effort.
Armitage.Shanks said:
If the option remains I wouldn't buy back the missed NI years to max the SP until she is 66. My wife is a few years short as she gave up work 30yrs ago. I said I'll look at it the year before she can draw it as you never know
Paying it now you lose the cash option to invest, granted it's not much but once it's gone it's gone.
We have bought all the back years we could whilst we still could, common sense would suggest the only reason the government are doing this is to save themselves money, good enough reason (for me) to do it.Paying it now you lose the cash option to invest, granted it's not much but once it's gone it's gone.
Seems to be a simple case of opening a Vanguard account (or the likes) and shoving as much money in a SIPP as possible each year to get the max pension tax relief.
Even the choice of fund(s) might be straightforward.
Using an IFA for the above would be a waste IMO. It quite litteraly takes 10mn and then you can get on with your day.
Even the choice of fund(s) might be straightforward.
Using an IFA for the above would be a waste IMO. It quite litteraly takes 10mn and then you can get on with your day.
nickfrog said:
Seems to be a simple case of opening a Vanguard account (or the likes) and shoving as much money in a SIPP as possible each year to get the max pension tax relief.
Even the choice of fund(s) might be straightforward.
Using an IFA for the above would be a waste IMO. It quite litteraly takes 10mn and then you can get on with your day.
I would agree with that. Even the choice of fund(s) might be straightforward.
Using an IFA for the above would be a waste IMO. It quite litteraly takes 10mn and then you can get on with your day.
Although MrsMikeIOW has hers with Cobens (IM as was). Defo higher fees, but we’ve done well over the years there.
Made me actually do some sums: 77 months (7.4 yrs) with the max going in (£240 pcm, topped up by the govt).
Paid in just over 18k: value today almost 34k.
Feels fairly good to me. Not smart enough to figure out the annualised return on that
No withdrawals yet, but that will likely change this year for various reasons.
PabloEscortCar said:
If there are any tax advantages in going over her salary no problem I can top it up from savings, it is just a question of what is best for us financially in the long term.
Any thoughts on the overall plan and any input regarding pension changes after this tax year much appreciated.
If you are paying tax in the 40% band and Mrs PEC is on 20% it may be wise for you to open a SIPP rather than her to regain the extra tax while she contributes to equivalent amount into household spending instead. This would be particularly effective if you are on 40% now but expect to be on 20% when you retire. Any thoughts on the overall plan and any input regarding pension changes after this tax year much appreciated.
mikeiow said:
I would agree with that.
Although MrsMikeIOW has hers with Cobens (IM as was). Defo higher fees, but we ve done well over the years there.
Made me actually do some sums: 77 months (7.4 yrs) with the max going in (£240 pcm, topped up by the govt).
Paid in just over 18k: value today almost 34k.
Feels fairly good to me. Not smart enough to figure out the annualised return on that
No withdrawals yet, but that will likely change this year for various reasons.
Similar here for Mrs a - first started in I think 2015 with the total pa of £3,600 so probably around £40k paid in and today £80k.Although MrsMikeIOW has hers with Cobens (IM as was). Defo higher fees, but we ve done well over the years there.
Made me actually do some sums: 77 months (7.4 yrs) with the max going in (£240 pcm, topped up by the govt).
Paid in just over 18k: value today almost 34k.
Feels fairly good to me. Not smart enough to figure out the annualised return on that
No withdrawals yet, but that will likely change this year for various reasons.
First few years via HL and then I swopped to Fidelity and then swopped it out again when we fell out with them over some UT sales.
mikeiow said:
nickfrog said:
Seems to be a simple case of opening a Vanguard account (or the likes) and shoving as much money in a SIPP as possible each year to get the max pension tax relief.
Even the choice of fund(s) might be straightforward.
Using an IFA for the above would be a waste IMO. It quite litteraly takes 10mn and then you can get on with your day.
I would agree with that.Even the choice of fund(s) might be straightforward.
Using an IFA for the above would be a waste IMO. It quite litteraly takes 10mn and then you can get on with your day.
However, after a chat with a pension adviser he made the point that because they are a large group they will almost certainly have agreed favourable fees compared to what we would achieve on a single policy.
So, with that in mind I will look at the implications of using that PP, as long as it can be kept on if she were to leave, it may well be an easier way of doing this.
PabloEscortCar said:
Where my Mrs works they provide a pension through Aviva, she MAY change job at some point, so I was dismissing that as a way to get this done, so as not to tie her in to them in any way.
However, after a chat with a pension adviser he made the point that because they are a large group they will almost certainly have agreed favourable fees compared to what we would achieve on a single policy.
So, with that in mind I will look at the implications of using that PP, as long as it can be kept on if she were to leave, it may well be an easier way of doing this.
Even the fees negotiated as part of a Corporate deal will invariably be higher than say, Vanguard's.However, after a chat with a pension adviser he made the point that because they are a large group they will almost certainly have agreed favourable fees compared to what we would achieve on a single policy.
So, with that in mind I will look at the implications of using that PP, as long as it can be kept on if she were to leave, it may well be an easier way of doing this.
And then you end up with a so-so platform and so-so support, at least compared to say, Vanguard.
Pretty obvious I am a fan of Vanguard's, mostly as I can compare to both the cost and service to the legacy Corporate plans I had from workplaces.
Other low fees platforms are available.
nickfrog said:
Even the fees negotiated as part of a Corporate deal will invariably be higher than say, Vanguard's.
And then you end up with a so-so platform and so-so support, at least compared to say, Vanguard.
Pretty obvious I am a fan of Vanguard's, mostly as I can compare to both the cost and service to the legacy Corporate plans I had from workplaces.
Other low fees platforms are available.
I suppose I was being pulled in for an easier life, but as we know convenience tends to cost in all walks of life.And then you end up with a so-so platform and so-so support, at least compared to say, Vanguard.
Pretty obvious I am a fan of Vanguard's, mostly as I can compare to both the cost and service to the legacy Corporate plans I had from workplaces.
Other low fees platforms are available.
But as Steve H pointed out the fees are only part of the equation, who knows if Aviva will be any better or worse than any other provider in the future - crystal ball anyone?
PabloEscortCar said:
I suppose I was being pulled in for an easier life, but as we know convenience tends to cost in all walks of life.
But as Steve H pointed out the fees are only part of the equation, who knows if Aviva will be any better or worse than any other provider in the future - crystal ball anyone?
I was with Aviva when I retired, legacy of a previous employer. Transferring to Vanguard made my life immeasurably easier, and cheaper fees wise.But as Steve H pointed out the fees are only part of the equation, who knows if Aviva will be any better or worse than any other provider in the future - crystal ball anyone?
By "better" you mean in terms of investment performance I think, but I am simply talking about platform quality, support and fees. I don't think there is much difference between 2 global index funds performance wise for example (but maybe there is?).
nickfrog said:
By "better" you mean in terms of investment performance I think, but I am simply talking about platform quality, support and fees. I don't think there is much difference between 2 global index funds performance wise for example (but maybe there is?).
I guess the way I see that is unlike a bank once set up surely it isn't something you need to constantly tinker with, is it?To be honest I don't think anything works properly in this country anymore so I expect hassle with whatever product/service I choose and I am rarely disappointed.
PabloEscortCar said:
I guess the way I see that is unlike a bank once set up surely it isn't something you need to constantly tinker with, is it?
To be honest I don't think anything works properly in this country anymore so I expect hassle with whatever product/service I choose and I am rarely disappointed.
I couldn't agree with you more and I even annoy myself by going on about Vanguard but they are VERY good at making the process extremely simple and idiot proof When I say it's a 15mn job from start to finish, I mean it. All you need is her NI number and a payment card for where the cash is. You might have to have chosen your fund(s) first but that's relatively easy. Your pension tax relief will land into your account from HMRC within a couple of months.To be honest I don't think anything works properly in this country anymore so I expect hassle with whatever product/service I choose and I am rarely disappointed.
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