Retirement

[Doon frae Troon]

No apologies for repeating this as I am surprised how few know about it.

If you or your spouse are a few years short of the 35 years min for a full state pension you can buy extra years to make it up.
It is not a lot of money around £250 per year if I remember [check it out on the website]

It is a no brainer. [unless you pop your clogs a couple of years after retiring ]

Inflation eh.
I bought mine around 25 years ago
Still makes it a good deal though.

 

[Voyager EMH]

Not sure about no income tax, but luxury items do require high levels of taxation for sure … pop it on watches, premium brands , handbags, jewellery etc ..
I would also be looking at golden handshakes, wages over £100k, pension pots in excess of £1million..
I know it’s not popular but if you want parity and equality that’s how you get there.

The "etc" would have to include brand new golf clubs. Bought by people with too much money and with too much time on their hands if they can play golf.

Second hand clubs however, no tax, the tax has already been paid.

 

[harpo_72]

The "etc" would have to include brand new golf clubs. Bought by people with too much money and with too much time on their hands if they can play golf.

Second hand clubs however, no tax, the tax has already been paid.

When does second hand become second hand ?

 

[Voyager EMH]

When does second hand become second hand ?

The day after the new-clubs-tax has been paid.

 

[SwingsitlikeHogan]

This advice is correct except the amount per year is just over £800 I believe.

Well worth getting a gateway ID to view your pension record if you are able to topup the pension. Pretty sure I read that 2006-16 periods have to be done by 2025

…and you need to balance the cost of buying a qualifying year NI against the additional £5.80 a week that that year will entitle you to.

 

[BiMGuy]

Not sure about no income tax, but luxury items do require high levels of taxation for sure … pop it on watches, premium brands , handbags, jewellery etc ..
I would also be looking at golden handshakes, wages over £100k, pension pots in excess of £1million..
I know it’s not popular but if you want parity and equality that’s how you get there.

This may sound strange to some.

But, depending on where you live £100k doesn’t go that far these days if you are the only earner with a family. Especially once you take into account losing child allowance and paying into a pension for a spouse.

I do appreciate that many people live on a hell of a lot less and if you venture north one could live like a king on that salary.

 

[Hobbit]

You see there is the amusing side , NHS pension pots being delimited because they need to keep them .. so are these too generous and not mentioned in wage negotiations? ( just poking the bear here, NHS services are greatly appreciated)

It’s very difficult to accurately discuss NHS pensions as there’s been at least 3 changes, in the last 25 years, to how they operate. T&C’s have been devalued, both in the pension and working/pay conditions. The NHS pension is a bit of a shadow of its former self. Those on the old Whitley Council T&C’s have done very well out of it but the vast majority of staff are on a very different scheme.

 

[backwoodsman]

…and you need to balance the cost of buying a qualifying year NI against the additional £5.80 a week that that year will entitle you to.

The advice to 'get advice' is the the one to follow. As it's not £5.80 per week that you might get.

I was 4 years short in contributions. It cost me just about £3k to 'buy' those years but I get about about £20 per week extra (just over £1k per year) so I only need to draw my pension for more than 3 years to be in 'profit'. Individual circumstances differ. So get advice.

 

[PJ87]

The advice to 'get advice' is the the one to follow. As it's not £5.80 per week that you might get.

I was 4 years short in contributions. It cost me just about £3k to 'buy' those years but I get about about £20 per week extra (just over £1k per year) so I only need to draw my pension for more than 3 years to be in 'profit'. Individual circumstances differ. So get advice.

100%

Also if your looking after grandkids and the parents arent using NI stamps apparently that's transferrable now

My mum is going to use ours to top up her missing years as the wife and I both working so don't need them.

 

[backwoodsman]

The advice to 'get advice' is the the one to follow. As it's not £5.80 per week that you might get.

I was 4 years short in contributions. It cost me just about £3k to 'buy' those years but I get about about £20 per week extra (just over £1k per year) so I only need to draw my pension for more than 3 years to be in 'profit'. Individual circumstances differ. So get advice.

And just emphasise my comment above. It was only after getting advice that I found out I was 4 years short. Up to then I was 'certain' that I was scheduled for a full contribution.

 

[harpo_72]

This may sound strange to some.

But, depending on where you live £100k doesn’t go that far these days if you are the only earner with a family. Especially once you take into account losing child allowance and paying into a pension for a spouse.

I do appreciate that many people live on a hell of a lot less and if you venture north one could live like a king on that salary.

I think you are right, that type of income will be servicing a mortgage, car loan and pension payments plus kids ( public school is pretty expensive at 7-20k a term .. so perhaps not being supported)
The trick is to manage that and not be drawn into all of the “I need this and the latest that “ ( golf stuff is outside of this)

 

[PJ87]

This may sound strange to some.

But, depending on where you live £100k doesn’t go that far these days if you are the only earner with a family. Especially once you take into account losing child allowance and paying into a pension for a spouse.

I do appreciate that many people live on a hell of a lot less and if you venture north one could live like a king on that salary.

It is amazing how different areas of the country wages are viewed because of cost of living

I was speaking to someone privately the other day and my wages up north I could live like a king but here I'm just above average. 4 bed semi detached, yes I've invested in panels, battery, and EV but that's the same as someone just paying their bills, choices.

I still have to go to work to afford to live and still will be working until my 60s

 

[NearHull]

The advice to 'get advice' is the the one to follow. As it's not £5.80 per week that you might get.

I was 4 years short in contributions. It cost me just about £3k to 'buy' those years but I get about about £20 per week extra (just over £1k per year) so I only need to draw my pension for more than 3 years to be in 'profit'. Individual circumstances differ. So get advice.

It takes just under 3 years to return the cost of buying the missing years. Ignoring inflation eroding value, where else do you get circa 30% interest annually?

 

[SwingsitlikeHogan]

If you need 35yrs qualifying NI years to qualify for the full state pension of £203/week…each year is worth £5.80. I’m sure I didn’t just make up that simple calculation, rather read it from a reputable source. Here…

From UK Gov Your Pension Explained.

Your State Pension explained

www.gov.uk

If your ‘starting amount’ is less than the full amount of the new State Pension​

Each ‘qualifying year’ you add to your National Insurance record after 5 April 2016 will add a certain amount (about £5.82 a week, this is £203.85 divided by 35) (totals do not sum due to rounding) to your ‘starting amount’, until you reach the full amount of the new State Pension or you reach State Pension age, whichever happens first.

ETA…the above certainly accorded with my wife‘s entitlement when I checked a couple of years back…she was two yrs short in years, and £11.60 or so a week short of full pension.

 

[SteveJay]

Agree with the "get advice" recommendations.

Like many others, my employers' pension was contracted out of SERPs, so I have a shortfall despite contributing NI for over 35 years.
Remember too that the state pension is taxable, so the additional weekly amount might be less than indicated above.

The cost for me to top up is about £800 a year. Haven't done it yet as I am still a few years away from 67 having retired at 55.

 

[harpo_72]

It is amazing how different areas of the country wages are viewed because of cost of living

I was speaking to someone privately the other day and my wages up north I could live like a king but here I'm just above average. 4 bed semi detached, yes I've invested in panels, battery, and EV but that's the same as someone just paying their bills, choices.

I still have to go to work to afford to live and still will be working until my 60s

I had a job interview with Rolls Royce, got offered the job and they are based Goodwood way. Cost of housing was high with the average cost being higher than the average national.
They offered an incentive scheme based on points but if you pulled the scheme apart and tried to distribute your points it didn’t work.. you either had no medical and a small car or no car and medical .. but the surrounding area would have forced in a minimum of 40mins each way. They did not have a work from home policy of note.
So when I said sorry the wage has to be north of this to make it viable the HR got upset and said what about the benefits and I said they don’t offer any value or pay a mortgage.. she said it’s basically about money, and I said yes that’s the only currency everyone deals in.
So I would say wages currently are an issue and business attitude is incorrect. We pay high for some services but we neglect others … but there will always be someone willing to take the job, they may not be able to do it or they are just treating it like an “inbetweener “
I estimate just owning a car to go to work costs with fuel prices, depreciation in the region of £5-8k a year. When I am retired I will have a fraction of that cost my vehicle will have an extended lifespan due to reduced usage etc ..
So if they don’t pay online with their area’s average it’s not worth taking the role. You will struggle in later life

 

[SwingsitlikeHogan]

Agree with the "get advice" recommendations.

Like many others, my employers' pension was contracted out of SERPs, so I have a shortfall despite contributing NI for over 35 years.
Remember too that the state pension is taxable, so the additional weekly amount might be less than indicated above.

The cost for me to top up is about £800 a year. Haven't done it yet as I am still a few years away from 67 having retired at 55.

In general the state pension isn’t taxed (as it’s less than the tax allowance). What happens when it comes in is that it puts more of any private pension you may already be receiving into taxable. So when I get my state pension in August I will only get £162.40 a week additional income on top of my current private pension as more of my private pension (£203 a week more) will be taxed. It amounts to the same as if your state pension is being taxed, but in fact it isn’t.

ETA…the same unless, that is, the state pension means that some, or some more, of your private pension is shoved into the 40% tax band.

 

[Voyager EMH]

In general the state pension isn’t taxed (as it’s less than the tax allowance). What happens when it comes in is that it puts more of any private pension you may already be receiving into taxable. So when I get my state pension in August I will only get £162.40 a week additional income on top of my current private pension as more of my private pension (£203 a week more) will be taxed. It amounts to as if your state pension is being taxed, but in fact it isn’t.

And don't forget to register your private pension as taxable with HMRC when the state pension kicks in.
It does not happen automatically, but they send you a warning about not paying your income tax, if you have failed to register it to be taxed at source.

 

[PJ87]

I had a job interview with Rolls Royce, got offered the job and they are based Goodwood way. Cost of housing was high with the average cost being higher than the average national.
They offered an incentive scheme based on points but if you pulled the scheme apart and tried to distribute your points it didn’t work.. you either had no medical and a small car or no car and medical .. but the surrounding area would have forced in a minimum of 40mins each way. They did not have a work from home policy of note.
So when I said sorry the wage has to be north of this to make it viable the HR got upset and said what about the benefits and I said they don’t offer any value or pay a mortgage.. she said it’s basically about money, and I said yes that’s the only currency everyone deals in.
So I would say wages currently are an issue and business attitude is incorrect. We pay high for some services but we neglect others … but there will always be someone willing to take the job, they may not be able to do it or they are just treating it like an “inbetweener “
I estimate just owning a car to go to work costs with fuel prices, depreciation in the region of £5-8k a year. When I am retired I will have a fraction of that cost my vehicle will have an extended lifespan due to reduced usage etc ..
So if they don’t pay online with their area’s average it’s not worth taking the role. You will struggle in later life

I find my wage have to top up my wife's, I mean don't get me wrong she isn't on a bad wage. But mine balances it so she can work in what she wants to do.

I know my avcs will be going to top up her pension so that we can retire together

 

[KenL]

And don't forget to register your private pension as taxable with HMRC when the state pension kicks in.
It does not happen automatically, but they send you a warning about not paying your income tax, if you have failed to register it to be taxed at source.

Do HMRC not already see what your private pension is? I'll be paying tax on my pensions before my state one arrives.