Discussion in 'Finance, Property, Law' started by barneyboo, Sep 26, 2012.

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  1. I am sorry if this has been posted before (I am new on here).
    Pensions :
    After 22 years service I am receiving an Army pension but also a war pension.
    Question is - When I get my state pension (next year) will my other pensions change or be affected?
  2. BiscuitsAB

    BiscuitsAB LE Moderator

    Shouldn't think so for a minute, but let me double check in the morning and I'll post up an answer.
  3. One of the strange things about State Pension is that it is taxable but not taxed.

    Some might think it a political move, but I wouldn't think the government would ever behave in such an underhand way.

    This means that if you earn over your personal allowance, tax will not be deducted from your state pension but from your other income. Ergo (daft word) if you have no other income than your state pension (not your position obviously) but your state pension exceeds your personal allowance, you can't be taxed on it! Devious and daft.

    You may be entitled to the age related personal allowance and should complete form P161 which you should receive shortly from the lovelies at HMRC. This extends your personal allowance, although it is reduced of your income exceeds a particular threshold.
  4. Dear Billy and Biscuits.

    I have 5 different private pensions , 1 of which I pay into the others being frozen.

    But, they were taken out when I was single, now ive a wife and kids... when I die, am I right in thinking all the money is lost ?

    I am self employed and for the last 10 years have not put any money into my ISAs.. because I just dont save enough per year to enable me to go up to my ISA limit anyway. Under these circumstances, would it not be better to stop paying into the pension and instead pay into the ISA ?

    just a look-see... I realize its not fair to ask detailed questions without full knowledge of circumstances.. but I think its a mistake to rely on pensions.
  5. BiscuitsAB

    BiscuitsAB LE Moderator

    Oo the pensions versus ISA argument.

    Accountants like pensions because of the tax relief, which is why an awfull lot of the Pension Mortgages that were set up were advised by accountants through the 80's and 90's. i wonder how many were actually funded properly?

    1st question. If your not drawing any of your pensions already and they are "frozen" (it will do as a descriptor for now) then unless they are written into trust the will form a normal part of your estate on death and pass to your NOK. Different rules apply ones you start taking a pension as there's tax to be paid.

    2nd question. Pensions get tax relief and thats no bad thing. However they are taxed in retirement. You can take 25% of your entire funds/s as a tax free lump sum and the rest has to provide and income. There are expectations to this by use of alternative products some of which are viable and hmrc approved and some of which are not and will get hmrc foaming at the mouth. Pensions can easily be written into trust.

    ISA's do not attract tax relief, are significantly more flexible, you can en cash the entire holding or take partial encashments. You can take income form them with no tax due. There is no cgt liability but there is potential for IHT on death. ISA's can be added into a trust.
  6. This does not constitute advice and I bow to Biscuits professional expertise but I looked at this recently and understood the following:

    All pensions from the major providers are already trusts and on your death the residual funds/death benefits will be distributed at the absolute discretion of the Trustees. In practice, it is normal for the pension scheme Trustees to consult your Executors and the funds will be distributed along the lines of your Will. You can elect for the funds to be paid to anyone, regardless of your Will, by completing an "Expression of Wish" form and lodging it with the pension scheme Trustees.

    The tax rules are complex but if you do not draw a pension from your personal policy/fund before age 75 the cash lump sum will not be taxed on your death. If you die after age 75 it will be, heavily.
  7. BiscuitsAB

    BiscuitsAB LE Moderator

    And if you haven't got a will, the above is yet another example of why you should have one.
  8. War Pension is tax free, so you can ignore it as far as the tax dude goes.
  9. First are you over the age of 55? Coz if you are you can draw on your pensions now.
    What you need is a good Independent Financial Advisor (IFA) who can tell you your options, but what I did (I was very sim to you, but that don't mean what I did would be best for you) was transfer all my pension pots to a Self Invested Pension Pot (SIPP) which I now draw, at 56. I got the lump sum 25% and a monthly pension.
    If you are not sure about IFAs, then have a look see at the big insurance companies web sites, they have names and contact numbers of IFAs who sell their products. Whilst that is no guide to their integrity, it does mean that they have been checked out by the big boys and are unlikely to be about shafting you.
    Hope that helps you out?
  10. Although you can draw from a SIPP at 55 it's not always going to be the best idea as a) you leave your investments a lot less time for growth and b) annuity rates are shite and in buying one at the minute is not a great idea unless you have to.

    Also if you want an IFA speak to people you know and get a personal recommendation - always the best way!
  11. FTRS get a pension anyway ??
  12. Yes :)