Retirement

[Voyager EMH]

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

Well, they do "see" it of course. But if, for example, you have more than one private pension, you have to decide which one gets all the tax taken from it. HMRC does not pick one at random. So it is up to you to tell HMRC which private pension you want your income tax taken from.

 

[KenL]

Well, they do "see" it of course. But if, for example, you have more than one private pension, you have to decide which one gets all the tax taken from it. HMRC does not pick one at random. So it is up to you to tell HMRC which private pension you want your income tax taken from.

Thanks for that. I'll have 2 pensions before the state one.
One (a civil service style one) starts paying whilst I am still working.
I have a pal who is an IFA so will be seeking his advice.

 

[harpo_72]

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

We are in a similar situation, but my wife has to have time freedom as she is the preferred parent for our son .
We both work mainly from home, I work European hours so my day is done around 16:00 which means I pick up the child care and general duties.
But I think we are bit unique in this respect, for a UK family.
Most fathers are at work and travelling home for18-19:00, I know I was when I was permanently employed.
I don’t know why now 2 wages are required to run a household but it does seem to be the case. Or at least one large wage. I did calculate how much I needed to earn a day to maintain us and that was without extras .. it’s actually quite frightening but most of it is mortgage, electricity/gas, services.
Remove the mortgage, or reduce the interest down as non profit ( do that to the services as well ) and it would be possible… I do believe the “we must make profit for our shareholders “ is costing too much .. but that’s probably not a view shared by many

 

[SwingsitlikeHogan]

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.

My pension provider has done that…so when I get the state pension they will be provided with a revised Tax Code.

 

[PJ87]

We are in a similar situation, but my wife has to have time freedom as she is the preferred parent for our son .
We both work mainly from home, I work European hours so my day is done around 16:00 which means I pick up the child care and general duties.
But I think we are bit unique in this respect, for a UK family.
Most fathers are at work and travelling home for18-19:00, I know I was when I was permanently employed.
I don’t know why now 2 wages are required to run a household but it does seem to be the case. Or at least one large wage. I did calculate how much I needed to earn a day to maintain us and that was without extras .. it’s actually quite frightening but most of it is mortgage, electricity/gas, services.
Remove the mortgage, or reduce the interest down as non profit ( do that to the services as well ) and it would be possible… I do believe the “we must make profit for our shareholders “ is costing too much .. but that’s probably not a view shared by many

Yeah it's depressing that it's like that now. Gone are the days of one wage

My parents when my dad lost his job my mum was the primary bread winner so he could take a few years to look after us when my nan passed.

Now days? I mean I could cover the wife's wages but it would mean no savings, holidays or Avcs for the pension..don't get me wrong would be like most of the UK but I don't think it's right it's like that now.

 

[SwingsitlikeHogan]

We have a decision to make when my state pension kicks in.

The £162.40/week increase in my income will basically cover all of my wife’s p/t job income. So we choose between: her stopping…in which case our joint monthly income will remain about the same; or she keeps working and I reduce my pension drawdown by £203/week (better for pension growth)…again our joint monthly income will remain about the same; or she keeps working and we are £162/week better off. A fourth option is she cuts down to one day a week…and all the aforementioned apply but just to a lesser extent.

Decisions, decisions…but from a fortunate position not afforded to most I fully accept.

 

[chellie]

Just checked my state pension and it says I can't improve my forecast any more.

However, I should be getting it now and not having to wait until I'm 67. Screwed over

 

[Lord Tyrion]

Just checked my state pension and it says I can't improve my forecast any more.

However, I should be getting it now and not having to wait until I'm 67. Screwed over

That might be because you have maxed out already. I am at that point. I am at the maximum already so even if I don't work again I will get the full state pension. The wording on the Pension page might be a little misleading there. (of course, if you haven't maxed out then that is annoying)

 

[PJ87]

Apparently I have 21 years of full contributions thus far

31 years left in my working career until I'm 65 , but I'll have made the 30 years by then

On the other hand just checking the wife's for her she has 17 years full, 2 years missing but 33 years to make up to the 30 so should be fine

 

[harpo_72]

I am about 2 years off maximum, after that I am topping the cumulative pot up. Unfortunately I don’t have enough work years to go elsewhere and participate in their national pension scheme ..

 

[Old Colner]

I am the same, full contributions but 10 years till I receive the max new state pension.
I have been looking into options of ways to make my earnings work the best for me in the remaining years and have come across salary sacrifice pension payments, it looks a good ideal then you realise that the money is with the pension providers and what they take off for fees and the forecasts for the payouts are dismal, I was reading one that quoted a 1/2 million pound pension pot would only give you £1,250 a month if you chose to take your tax free 25% and if you didn't take the lump sum it would be 25 years for the figures to level, Oh they know how to make money don't they.

 

[SwingsitlikeHogan]

That might be because you have maxed out already. I am at that point. I am at the maximum already so even if I don't work again I will get the full state pension. The wording on the Pension page might be a little misleading there. (of course, if you haven't maxed out then that is annoying)

You have to be careful about the ‘35yrs are required to qualify for full state pension’. A couple of years back my wife seemed to have about 40 qualifying years but she didn’t qualify - she was two years short.

I spoke with the state pensions team and it was explained why…something to do with the state scheme changing over the years and the current increased level of pension - with the 35yrs actually being in respect of those who started paying NI contributions more recently…it wasn’t easy to understand - and the advisor told me that they get loads of such confused queries coming in. Bottom line it that the 35yrs is a bit misleading.

 

[Lord Tyrion]

You have to be careful about the ‘35yrs are required to qualify for full state pension’. A couple of years back my wife seemed to have about 40 qualifying years but she didn’t qualify - she was two years short.

I spoke with the state pensions team and it was explained why…something to do with the state scheme changing over the years and the current increased level of pension - with the 35yrs actually being in respect of those who started paying NI contributions more recently…it wasn’t easy to understand - and the advisor told me that they get loads of such confused queries coming in. Bottom line it that the 35yrs is a bit misleading.

I've checked my online pension statement on the govt website but your point is sound. Best to check and confirm rather than assume. Never assume

 

[SwingsitlikeHogan]

Apparently I have 21 years of full contributions thus far

31 years left in my working career until I'm 65 , but I'll have made the 30 years by then

On the other hand just checking the wife's for her she has 17 years full, 2 years missing but 33 years to make up to the 30 so should be fine

A qualifying year is linked in some way to the basic state pension, in essence you have to have earned and paid NI contributions for the equivalent of something a bit over £6,000/year over a shorter period. Important if, for instance, your work is irregular.
ETA...the article linked to below explains

How are qualifying years for the state pension worked out?

The weekly paid seem to be the most vulnerable to losing a qualifying year. Should they register as unemployed or play class 3 contributions so they don't miss out?

www.thisismoney.co.uk

 

[backwoodsman]

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.

State pension is taxable but tax is never deducted from it. IE it counts towards your total taxable income, but the SP is paid in full. And your full tax contribution is deducted from your other source(s) of income. If all you get is the SP, then you don't pay tax simply because the SP is less than the current personal allowance. (Which is what you said but I'm in pedantry corner trying to highlight the difference between 'not taxable' and 'tax not deducted')

 

[Bunkermagnet]

That might be because you have maxed out already. I am at that point. I am at the maximum already so even if I don't work again I will get the full state pension. The wording on the Pension page might be a little misleading there. (of course, if you haven't maxed out then that is annoying)

Are you not Ltd director?
If so, do you still pay NI voluntarily or just "meh" now?

 

[Lord Tyrion]

Are you not Ltd director?
If so, do you still pay NI voluntarily or just "meh" now?

Get paid through a combination of paye and dividends, if it's a good year. No Phil Green here 🛳

 

[Red devil]

Just checked my state pension and it says I can't improve my forecast any more.

However, I should be getting it now and not having to wait until I'm 67. Screwed over

Yes, an outrage. My partner is the same fortunately she has other income and I pay for the "extras"

 

[Hobbit]

Just checked my state pension and it says I can't improve my forecast any more.

However, I should be getting it now and not having to wait until I'm 67. Screwed over

Not a topic I bring up around Mrs H. She’s coming up 64 but has to wait till she’s 66yrs 3mths. And what makes it worse is ask I’m a bit older I get mine at 66yrs 0mths. Feathers are spat when we discuss it.

 

[SwingsitlikeHogan]

State pension is taxable but tax is never deducted from it. IE it counts towards your total taxable income, but the SP is paid in full. And your full tax contribution is deducted from your other source(s) of income. If all you get is the SP, then you don't pay tax simply because the SP is less than the current personal allowance. (Which is what you said but I'm in pedantry corner trying to highlight the difference between 'not taxable' and 'tax not deducted')

Pedantry is fine when correcting or adjusting a misconception.