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Retirement Investing Today

Including Financial Independence and Retiring Early (FIRE)
YeeWo
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Re: Retirement Investing Today

#4476

Postby YeeWo » November 13th, 2016, 1:47 pm

TopOnePercent wrote:Unfortunately the other major blocker is that nearly 60% of my wealth is in private pensions, and at the age of 42, the minimum age for putting them into payment has risen to 58, likely to hit 60 before I can claim my money.

When did the minimum age rise to 58? My online benefits calculator still allows taking pension from 55!? If you didn't wish to wait until 58 (health or lifestyle) presumably some sort of QROPS transfer would allow You to access Your Money?!!

TheRIT
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Re: Retirement Investing Today

#4484

Postby TheRIT » November 13th, 2016, 2:11 pm

YeeWo wrote:When did the minimum age rise to 58? My online benefits calculator still allows taking pension from 55!? If you didn't wish to wait until 58 (health or lifestyle) presumably some sort of QROPS transfer would allow You to access Your Money?!!

As part of budget 2014 a consultation called 'Freedom and choice in pensions' was published. In July 2014 the government response was published https://www.gov.uk/government/consultations/freedom-and-choice-in-pensions which states "the government will increase the minimum age at which people can access their private pension under the new tax rules from 55 to 57 in 2028".

Don't worry though as there is still plenty of time for continued government tinkering. For example, we already have the Centre for Policy Studies lobbying to increase it to 60 in 2024.

TheRIT
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Re: Retirement Investing Today

#4490

Postby TheRIT » November 13th, 2016, 2:21 pm

TheRIT wrote:
YeeWo wrote:When did the minimum age rise to 58? My online benefits calculator still allows taking pension from 55!? If you didn't wish to wait until 58 (health or lifestyle) presumably some sort of QROPS transfer would allow You to access Your Money?!!

As part of budget 2014 a consultation called 'Freedom and choice in pensions' was published. In July 2014 the government response was published https://www.gov.uk/government/consultations/freedom-and-choice-in-pensions which states "the government will increase the minimum age at which people can access their private pension under the new tax rules from 55 to 57 in 2028".

Don't worry though as there is still plenty of time for continued government tinkering. For example, we already have the Centre for Policy Studies lobbying to increase it to 60 in 2024.


Sorry, tried to edit post but timed out. I'm not actually sure if this has actually been passed into law as the consultation only states "the government has taken the following decisions". Does anybody know?

grimer
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Lifetime Allowance - divorce and remarry?

#6862

Postby grimer » November 19th, 2016, 9:34 pm

Hi,

This thread has been very enlightening and I'm aiming for a FIRE age of 55. I'm a bit late to the investment scene and got serious last year. I'm currently putting my entire wage, that attracts the 40% IT rate, into my company pension and SIPP. I'm also investing into an ISA. My wife is a teacher, so potentially we will have her pension kicking in at some point, but she is four years younger than me, so if we're both going to retire it will be my 'pot' that needs to provide for both of us.

I think we'll need at least £48k per year to fully enjoy retirement, but could live on far less (maybe £24k for bare essentials). We're currently child free (but trying), and mortgage free (2 bed Zone 2 flat in London).

For those people that are hitting the lifetime allowance, are you happily married? If so, perhaps it might pay to divorce, split the pension pot and then remarry? That would also double the amount you can withdraw before you hit the 40% tax band - £133,333 with a 'take home' of £117k (based upon new £50k 40% threshold, £11k personal allowance and 25% tax free lump sum). £40k of that could be transferred into your ISAs for future tax free income.

Wizard
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Re: Retirement Investing Today

#7020

Postby Wizard » November 20th, 2016, 2:20 pm

Minerva wrote:Each island has slightly different rules. We live on Guernsey. The rules here are fairly simple provided you don't plan to work in the island economy, where a right to work permit needs to be obtained.
The housing stock is divided into local and open market, the latter being available to anyone. Naturally the better properties are in the open market and although they go do a premium to local market "equivalents" due to very low turnover and mumbling about possibly merging the two markets the differential is not that great. We are lucky that my wife qualifies (and I do by extension) for local market, but we have decided to rent till we are sure we want to buy. (There are open market rentals as well). In all probability if we do buy it would quite likely be open market anyway as there are more nice ones to choose from - plenty of online browsing available.
There is plenty of information available from https://gov.gg/openmarket
There are some eligibility rules but anyone who is financially independent and an EU citizen should have no problem. As you can imagine investing from here is very easy andno VAT helps, too.
Jersey has different rules but equally they are online.


Helpful post that, got me thinking. Many thanks.

Terry.

Wizard
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Re: Retirement Investing Today

#7022

Postby Wizard » November 20th, 2016, 2:37 pm

Wizard wrote:
Minerva wrote:?..plenty of online browsing available.


Helpful post that, got me thinking. Many thanks.

Terry.


Are there better places to look than Rightmove? That only appears to have eight properties for sale on the whole of Guernsey. Though I do like to look of the fort with planning consent...

Terry.

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Re: Lifetime Allowance - divorce and remarry?

#7329

Postby DeBriefed » November 21st, 2016, 11:39 am

grimer wrote:For those people that are hitting the lifetime allowance, are you happily married? If so, perhaps it might pay to divorce, split the pension pot and then remarry? That would also double the amount you can withdraw before you hit the 40% tax band - £133,333 with a 'take home' of £117k (based upon new £50k 40% threshold, £11k personal allowance and 25% tax free lump sum). £40k of that could be transferred into your ISAs for future tax free income.


Sadly not hitting the lifetime allowance, and also not married, but divorce seems a bit of a radical response! Is this really how it works though? Don't you each get a tax free allowance as individuals? If your wife is a teacher, doesn't she get a DB scheme that would effectively count towards her own lifetime allowance (my understanding was that DB schemes are still allocated a value for the purposes of calculating lifetime allowance, see e.g. https://www.gov.uk/tax-on-your-private- ... -allowance which suggests the nominal value is 20x the first year's benefits plus the lump sum).

grimer
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Re: Lifetime Allowance - divorce and remarry?

#7451

Postby grimer » November 21st, 2016, 4:36 pm

DeBriefed wrote:Sadly not hitting the lifetime allowance, and also not married, but divorce seems a bit of a radical response! Is this really how it works though? Don't you each get a tax free allowance as individuals? If your wife is a teacher, doesn't she get a DB scheme that would effectively count towards her own lifetime allowance (my understanding was that DB schemes are still allocated a value for the purposes of calculating lifetime allowance, see e.g. https://www.gov.uk/tax-on-your-private- ... -allowance which suggests the nominal value is 20x the first year's benefits plus the lump sum).


I'm a long way from the Lifetime Allowance, but I understand that 'divorce' is considered to be a 'standard' method of tax avoidance and retirement planning for higher earners.

You're correct with regards to my wife's pension being factored into any calculations. This method would be more suitable for couples where one partner has remained at home to raise children - e.g.

    Husband and wife divorce
    Husband's pension pot of £900k. Wife takes £600k of pension in divorce, leaving the husband with £300k.
    Husband is free to continue building his pension back up again.

Obviously, it goes without saying that you'd want to speak to a solicitor and tax expert before embarking upon any such course of action. It struck me as a clever way of avoiding the Lifetime Allowance limit, but for all I know it may not be legal.

DeBriefed
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Re: Retirement Investing Today

#7770

Postby DeBriefed » November 22nd, 2016, 2:18 pm

Ahh I see. That does make sense.

When my partner and I were making our wills when expecting our daughter our solicitor was sort of horrified that we wouldn't get married to avoid IHT. Maybe we are mad not to do it, but tax avoidance just seemed a very sad reason to make (or break) a marriage.

grimer
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Re: Retirement Investing Today

#7820

Postby grimer » November 22nd, 2016, 4:30 pm

I think the idea is that you hop on the train to Scotland and remarry the day after you've split the pot.

TopOnePercent
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Re: Retirement Investing Today

#9857

Postby TopOnePercent » November 28th, 2016, 11:15 pm

ap8889 wrote:I am giving very serious consideration to divorce and subsequent remarriage. It would neatly solve the dumb Lifetime allowance limit issues I have. Plus the (ex?) wife would ultimately gain the pension income at a lower rate than me. The tax advantages are an easy sell (more handbag money, darling?), but I am not sure I will be lucky enough for her to say yes a second time around, she has had many years to despair at all my quirks, faults and peccadillos....

Handbags for the win?



Yes, quite. That would be my biggest fear too. Hopefully some sensible government will wise up and allow pot splitting with the doris to prevent all the legal shenanigans.


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