CliveH Posted January 20, 2014 Posted January 20, 2014 Had Enough - 2014-01-20 11:38 AM CliveH - 2014-01-20 8:24 AM Frank - I covered this earlier. CliveH - 2014-01-19 9:19 AM But you do throw up an interesting point. If Dave's wife had said to her employer that she wanted not to make the contribution in the normal way - but asks her employer to reduce her salary via "salary sacrifice" to £19,000 and then getting the employer to make an employers contribution then the employers NIC at 13.8% on that £1000 can be paid into the scheme. So if it is this that you have tried to research Frank - then nice try but you have part of the NIC 'kicker" at the wrong rate! - DOH!!!! We are doing a lot of these for people who earn too much to now be eligible for child benefit. It is a simple matter to do - BUT - it does involve the employer in a fair bit of "negotiation" with the Revenue - the scheme has to be registered and the employee has to have an audit trail of requesting such a tax avoidance scheme. They have to enter it on their tax return as such a scheme But keep trying Frank! You must be learning a lot! Nice to see that you are indeed learning more about business Well done BUT there are some caveats that you should outline to your employee if you as the employer decide to go down that route. Yes - you as the employer would save 13.8% NIC and yes the employee would save their employees NIC as well which is a remarkably attractive proposition such that if you rebate the 13.8% employer NIC into the pension scheme as well the employee can end up having the same Take Home Pay, but a considerable increase in pension contributions. One huge benefit and one that is quite topical at the moment is that individuals who earn too much to receive child benefit can, by using salary sacrifice, carry on receiving this benefit AND pay more into their pension. This has raised the profile of Salary Sacrifice and we are setting up a number of schemes on the back of this. That is the "pro's" of such a scheme. The "con's" are that the revenue do classify such schemes as potential tax avoidance schemes and so you as the employer have to gain approval from the revenue and certain letters from the employee have to be in place requesting that they be allowed to do this. You can see why the revenue is so careful as the tax avoidance possibilities are considerable. The Employer also has to have a payroll system that can run a salary sacrifice scheme - not usually a big problem but it can lead to extra expense for the employer. For the employee, one huge disadvantage is that they now have a salary of a lower level. So if the Death in Service Benefit is, say 4 times salary then it will now be 4 times £19K not 4 times £20K. Similarly, if the employee wants a mortgage then the lending calculation will be a multiple of £19K not £20K - so salary sacrifice can have a negative effect on the individuals ability to borrow to buy their house. Also - certain State Benefits are salary related and so these are also reduced. One of these of course is S2P - the Second State Pension. This would now be based upon the individuals reduced NIC contribution rate. It's pity that you couldn't resist the snide little remark about me learning about business, but there you are. I haven't learnt this today Clive. I told you that I'd set up this pension scheme years ago and I know exactly the pros and cons of it! But this gets me back to my original post where I gave you the figures. If my staff member lets me put £1000 p.a. into our pension scheme instead of taking it in salary it will only cost him £700 p.a. and if he takes the 25% lump sum he will get back everything he's paid in 12 years. accept he'll get it back gross and may have to pay tax on it - BUT WE DON'T KNOW THAT! So, having settled that, can you now tell me if we put £1000 p.a. into his pension for thirty years, how much do you expect the fund to grow? Presumably the pension funds will be invested in the same markets as your ISAs, so we can expect similar growth? If you can now tell me roughly how much a typical provider can grow the fund we will then be able to work out how much bigger the pension payments will be and how that will reduce the period to get back the £21,000 that it has cost him. Dave's 11 years is may actually be looking pessimistic for someone in a non-contributory scheme. Ps Where did I get the NIC rate wrong? I've only mentioned employee's NIC as far as I remember which I put at 10% but stressed that this was for ease of calculation. I'm aware that it's not exactly right. I'm also well aware of the employer's rate thank you as until recently I still did our P11ds and we have to pay employer's NIC on car benefits for instance and my spreadsheet was programmed at 13.8%. Please show me where I stated a specific NIC rate. I never said you got the rate wrong - I said that you were wrong to include it. I went on to say that you did, by making that mistake flag up the interesting option of salary sacrifice - and then you mentioned it again without - it seems - reading my post on this. And once again - I have tried to be fair and answer your questions. But may I draw your attention to the fact that you still have not answered even one of mine. So Frank - please - what would be your answer to this question that I asked two days ago? ..................... Answer me one simple question Frank Assuming you are a basic rate taxpayer - given the choice of an investment that provided the same effective income but had A) a death benefit of either Zero or 45% or B) an effective 80% (no tax relief on ISA contributions) return on death Which one would you prefer? .......................
Tracker Posted January 20, 2014 Posted January 20, 2014 On those points of view Frank I absolutely agree with you. Unlocked pension funds are too easy to access when the cold wind of debt or fancy blows. The tax benefits of employer contributions are not to be under estimated. Company car or, a subsidised mortgage, or 'free' private healthcare are great incentives for loyalty. As you say, there is much more to pension provision for the employed than appears on the surface of it - however for the self employed it does come down to the money - because nobody else will help provide for your future. Personally were I of working age with many years to go before retirement I would now be looking at a combination of getting my own home paid for asap to create property equity, a properly funded pension to provide a state pension top up at retirement age, and substantial non cash ISA investment to give me the option to retire earlier than the state age should I wish. All probably unaffordable for the average guy unless you start small with each and compromise on expensive toys and holidays to use some of the money to fund your own future. Taking responsibility for your own future NOW is better than blaming everyone else for not having a decent standard of living in later life! I did it, so I know it works!
CliveH Posted January 20, 2014 Posted January 20, 2014 Had Enough - 2014-01-20 11:56 AM CliveH - 2014-01-20 8:59 AM Frank ISA's - both you and Dave make the mistake of only referring to Cash ISA's An Investment ISA enables the individual to access exactly the same funds as they can in a pension. And so when you refer to "minuscule interest rates" you are talking about the current poor return from money on deposit. You could put your pension pot in the providers Cash fund and get exactly the same "minuscule interest rate" within the Pension as you would get in an ISA. Or you could take advice and select a portfolio for your Investment ISA exactly the same as that for your pension! This should be suitable to your attitude to risk and that would include a range of investments - Equities, Fixed Interest, Property and indeed - Cash - tho cash funds are VERY poor performers currently. But the point is, that the investment opportunities and options within an Investment ISA is exactly the same as for a pension. Again I have previously provided a couple of links that offer a good comparison. I repeat them here:- http://citywire.co.uk/money/are-pensions-finished-yes-because-isas-are-better/a660834 http://www.thisismoney.co.uk/money/pensions/article-1699680/Pension-vs-Isa-The-big-debate.html May I sugest you read them. I have read them and it's as I knew! That the jury is out with varying opinions and recommendations but the bottom line seems to be that having both is the best. An employer can't pay into an ISA for you but he can pay into a pension for you with huge tax benefits. But the one thing that shines out from everyone of the experts is the same comment that 'ISAs are easily accessible if you need money'. And this is exactly the point that Dave made and with which I concur. People are silly sometimes and you just know that many of them taking the ISA route will succumb to temptation and spend it, guaranteeing a much poorer retirement. Sometimes you have to think beyond pounds, shillings and pence and look at things from a different viewpoint. I'm not having a go here but you rubbished my policy of providing cars for my managers. I think, as does my accountant that my way of doing it is very cost effective. But once more, as someone who has employed a number of people for many years I understand that there's more to life than the bottom line. Yes I could give them salary in lieu, but they don't want it as running a company car protects them from the shocks of high bills but, more importantly, giving them a car ties them to me and makes them think very deeply about leaving as they know that their next employer may not provide a car and they'll have to buy one. It's understanding issues such as this that make someone a good businessman and a good man-manager! It's not all pounds, shillings and pence. I agree with you totally that a business is not just money - but I do belief in the old adage that "Turnover is Vanity, - Profit is Sanity. And there are two ways of making a profit - you look at both the top and bottom line. But as regards ISA's being "available" - I suppose dealing with the clients that we do - such matters of financial discipline is not really an issue. Would we want a client that is undisciplined with money? Frankly No - and No again! But you cannot deny that to 25 year olds with the goal of buying there own home, the prospect of putting money away in a pension where currently you can only take 25% of the fund as Tax Free cash* (see later) and the remaining 75% has to be squeezed out over the rest of your life is hardly an attractive proposition. In contrast - saving via an ISA provides the discipline to save for their deposit and the saving amount should be about the same as the monthly mortgage payments they are going to have to make. But ISA's have other advantages over pensions in retirement that are touched on in the articles I cited - more and more benefits are means tested - and whilst pension income WILL be taken into account - the income from an ISA will not. From the "This is Money" article:- - Means-testing in retirement Used as a source of income, Isas have certain benefits for retirees. 'The Isa really comes into it's own at the time the person decides to stop working and start drawing an income from the fund,' says Lorreine Kennedy. Danny Cox explains: 'Tax free income from Isa has no impact on age related allowances for the over 65s, no impact on personal allowances for those with income over £100,000 and there is no requirement to record on a tax return.' .................... So for example, for the over 65's whilst Osbourne is phasing out Age allowance (where for every £1 of pension income over a certain limit the Age Related increased personal allowance is reduced by £2) in the past and to a decreasing degree now ISA income was preferable because unlike a pension income - it had no effect here. .................... Tax Free Cash HMRC is at pains to inform us that we should be referring NOT to Tax Free Cash but PCLS - or Pension Commencement Lump Sum. This is what they now call it. Why? Because they want the option to limit the amount you can take tax free. Both political parties have played with the idea that for some the PCLS should not be Tax Free. This is another reason why, if a tax free lump sum is attractive to you as you retire, it is probably unwise to rely on the continued "generosity" of the taxman to allow you even 25% of your fund as Tax Free Cash. Note - do check if you have an old style scheme because Section 226 pension plans allow 3 times the residual income as TFC (not attractive because with todays low annuity rates this would be 3 x 5% is we are agreed that a 5% annuity is a reasonable assumption. Similarly - a COMP or a CIMP scheme will allow 3n/80th of Final Salary to be taken as TFC where n is the number of years service. This can mean that in certain circumstances the whole pot can be taken as Tax Free Cash. In others it can mean a lot less than 25%. But you can always "wash the scheme benefits through" a personal pension plan to achieve 25% if that figure is higher.
capcloser Posted January 20, 2014 Author Posted January 20, 2014 We save as much as we can from our wages,,between us we put £5000 in isas by direct debit,,we then top up if we can at end of year,also any cash left at the end of the week goes in a tin,sounds daft i know but last cash in of tin we had nearly a grand,so that goes in joint savings account.My point about a pension for me is i only have 10 working years left so there is no way i can build up a decent pension pot,so i might as well top up my weekly contribution and take the lot when i retire,maybe 12000-15000 grand to stick with my savings or have a holiday and a new car,its my own fault i've left it a bit late but am trying now
CliveH Posted January 20, 2014 Posted January 20, 2014 As I said before Capcloser - the benefit of Auto enrolment is that your employer will be making a contribution. And to be fair to Zurich - they do have some good funds. The choice between ISA or Pension is basically one of choosing the "Tax Wrapper" - You can chose the cash (money on deposit) fund within your pension and so that would be the broadly equivalent to a cash ISA but with tax relief and the employer contribution to boost it. BUT - you will pay tax on the income you take in retirement and so - again, broadly speaking - the taxman taketh what he initially allowed. As a rule of Thumb - it is an idea to consider having whatever your age is in safe, lower risk funds - so that would be Cash (smaller amount than you might have read about in the past as rates currently are so low) - some property funds - and Fixed Interest (Corporate Bonds and Gilts) So if you are 10 years from retirement - can I assume you are c. 55? If so them the "rule of thumb" would suggest you have 55% in these safe but reasonable performing sectors. The 45% could be invested in higher risk but potentially higher return sectors. Then each year or so you rebalance the portfolio back to your age as a percentage in safe funds. This way you consolidate profit when it is made and invest when the market is low. Which is the ideal scenario - it also means that as you approach retirement you have an increasing percentage in "Safe" Sectors. To give you some idea of what we do - we have been looking at Japan - it has been in the doldrums for decades - most people there place they money on deposit as there is no easy mechanism for the average bloke to invest in the markets. Japan has taken the concept of our ISA and made its own - It is estimated that if just 5% of the funds currently held on deposit are used to invest in Japanese Industry via the "Nippon ISA" then the economic boost to the stagnant Japanese economy will be staggering. The Nippon ISA is launched this year. http://en.nikkoam.com/files/pdf/asian_perspective/intro_isa_201302.pdf "Domestic ownership of shares is an important driver of long-term equity returns. To promote this, Japan is introducing its own version of the ISA – a tax-efficient investment account. The scheme will start in January 2014, and should encourage domestic investors back into equities, boosting demand." Whilst we can not invest in aJapanese ISA :-D - you could have a dabble in a Japanese Fund within either an ISA or your pension. I would not put all 45% in!! but 5% to 20% maybe. The prospects look very good. Better than some markets !
Guest Had Enough Posted January 20, 2014 Posted January 20, 2014 CliveH - 2014-01-20 12:27 PM Answer me one simple question Frank Assuming you are a basic rate taxpayer - given the choice of an investment that provided the same effective income but had A) a death benefit of either Zero or 45% or B) an effective 80% (no tax relief on ISA contributions) return on death Which one would you prefer? ....................... I didn't answer it for two reasons, the first being that I'm not really interested in this ongoing Pension/ISA debate. I entered this thread to debate the payback time suggested by Dave225, which you rubbished. I could easily ask this question: Which would you prefer, a pension that will only cost you about £700 p.a but which will actually put £1000 into a pot for you and guarantee you an income top-up for the rest of your life? Or would you prefer an ISA which you may well have been tempted to spend leaving you nothing to top up your basic state pension? It's a bit like opinion polls, sometimes the question will almost dictate the answer. But let's get back to the original point. Your finicky comment about me not quoting the correct NIC rate has prompted me to redo the sums. I believe that employee's rate is now 12% so the £1000 I put into my employee's pension will actually only cost him £680 and not £700. So we do the same sum. Assuming no fund growth he'll have £30K. He takes £7500 as a lump sum leaving £22500. His pension will be gross £1125. he has lost 30 x £680 by choosing the pension, which is £20400. £20400 minus his £7500 lump divided by £ £1125 is 11.46. So Dave's calculations are looking pretty good. He will have got back everything he put in in about eleven and a half years. This does assume that the person concerned when retiring won't be a tax payer but with a small pension and a state pension he's not likely to be. But now we get to the interesting bit, which you haven't answered. How much is his £30K likely to grow to? If it grows to £40K he'll have a £10K lump sum and a pension of £1500 p.a. and will repay his £20400m contributions in seven years - even if he ends up paying income tax it won't take long! Dave's theory is looking even better! So how much do you, as an expert, think a £30K pot as described will grow over the thirty year period?
CliveH Posted January 20, 2014 Posted January 20, 2014 Had Enough - 2014-01-20 2:40 PM CliveH - 2014-01-20 12:27 PM Answer me one simple question Frank Assuming you are a basic rate taxpayer - given the choice of an investment that provided the same effective income but had A) a death benefit of either Zero or 45% or B) an effective 80% (no tax relief on ISA contributions) return on death Which one would you prefer? ....................... I didn't answer it for two reasons, the first being that I'm not really interested in this ongoing Pension/ISA debate. I entered this thread to debate the payback time suggested by Dave225, which you rubbished. I could easily ask this question: Which would you prefer, a pension that will only cost you about £700 p.a but which will actually put £1000 into a pot for you and guarantee you an income top-up for the rest of your life? Or would you prefer an ISA which you may well have been tempted to spend leaving you nothing to top up your basic state pension? It's a bit like opinion polls, sometimes the question will almost dictate the answer. But let's get back to the original point. Your finicky comment about me not quoting the correct NIC rate has prompted me to redo the sums. I believe that employee's rate is now 12% so the £1000 I put into my employee's pension will actually only cost him £680 and not £700. So we do the same sum. Assuming no fund growth he'll have £30K. He takes £7500 as a lump sum leaving £22500. His pension will be gross £1125. he has lost 30 x £680 by choosing the pension, which is £20400. £20400 minus his £7500 lump divided by £ £1125 is 11.46. So Dave's calculations are looking pretty good. He will have got back everything he put in in about eleven and a half years. This does assume that the person concerned when retiring won't be a tax payer but with a small pension and a state pension he's not likely to be. But now we get to the interesting bit, which you haven't answered. How much is his £30K likely to grow to? If it grows to £40K he'll have a £10K lump sum and a pension of £1500 p.a. and will repay his £20400m contributions in seven years - even if he ends up paying income tax it won't take long! Dave's theory is looking even better! So how much do you, as an expert, think a £30K pot as described will grow over the thirty year period? Now I am seriously worried about you Frank Is your short term memory THAT bad? We dealt with this yesterday - quote from my post 9:19 "Your employer may take pension contributions from your pay before they deduct Income Tax. This is a ‘net pay arrangement’. You don’t pay Income Tax on your pension contributions but you pay National Insurance on your pension contributions." "...............BUT YOU PAY NATIONAL INSURANCE ON YOUR PENSION CONTRIBUTIONS. And this is from :- http://www.hmrc.gov.uk/incometax/relief-pension.htm 'Usually your employer takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). You only pay tax on what's left. So whether you pay tax at basic, higher or additional rate you get the full relief straightaway.' And then http://www.nidirect.gov.uk/tax-relief-on-pension-contributions states "Your employer may take pension contributions from your pay before they deduct Income Tax. This is a ‘net pay arrangement’. You don’t pay Income Tax on your pension contributions but you pay National Insurance on your pension contributions." .................... So - AN EMPLOYEE PAYS NATIONAL INSURANCE ON THEIR PENSION CONTRIBUTIONS! ................... As for growth over 30 years? Depends on the fund choice, timing and the investment strategy. But whatever the growth is - as you can chose the same funds to hold in an ISA or a Pension - the question is a Strawman The answer is - Whatever the growth, it would be the same for both ISA and pension because the tax treatment of money once invested is the same. The difference - (here we go again! *-)) is that with a pension the tax is deferred until you take the benefits - so you get tax relief on contributions but pay tax on the income in retirement whereas with an ISA there is no tax deferral so you can only invest the net amount BUT - the income you take from an ISA is NOT subject to income tax or CGT, Nor does ISA Income effect any income related benefits and ISA income does not require you to enter it on a tax return. But seriously Frank - have you seriously forgotten that we have already discussed the fact that "You don’t pay Income Tax on your pension contributions but you pay National Insurance on your pension contributions." (?) (?) (?) (?) (?) (?) (?) (?) (?) (?)
CliveH Posted January 20, 2014 Posted January 20, 2014 Had Enough - 2014-01-20 2:40 PM CliveH - 2014-01-20 12:27 PM Answer me one simple question Frank Assuming you are a basic rate taxpayer - given the choice of an investment that provided the same effective income but had A) a death benefit of either Zero or 45% or B) an effective 80% (no tax relief on ISA contributions) return on death Which one would you prefer? ....................... I didn't answer it for two reasons, the first being that I'm not really interested in this ongoing Pension/ISA debate. I entered this thread to debate the payback time suggested by Dave225, which you rubbished. I could easily ask this question: Which would you prefer, a pension that will only cost you about £700 p.a but which will actually put £1000 into a pot for you and guarantee you an income top-up for the rest of your life? Or would you prefer an ISA which you may well have been tempted to spend leaving you nothing to top up your basic state pension? It's a bit like opinion polls, sometimes the question will almost dictate the answer. But let's get back to the original point. Your finicky comment about me not quoting the correct NIC rate has prompted me to redo the sums. I believe that employee's rate is now 12% so the £1000 I put into my employee's pension will actually only cost him £680 and not £700. So we do the same sum. Assuming no fund growth he'll have £30K. He takes £7500 as a lump sum leaving £22500. His pension will be gross £1125. he has lost 30 x £680 by choosing the pension, which is £20400. £20400 minus his £7500 lump divided by £ £1125 is 11.46. So Dave's calculations are looking pretty good. He will have got back everything he put in in about eleven and a half years. This does assume that the person concerned when retiring won't be a tax payer but with a small pension and a state pension he's not likely to be. But now we get to the interesting bit, which you haven't answered. How much is his £30K likely to grow to? If it grows to £40K he'll have a £10K lump sum and a pension of £1500 p.a. and will repay his £20400m contributions in seven years - even if he ends up paying income tax it won't take long! Dave's theory is looking even better! So how much do you, as an expert, think a £30K pot as described will grow over the thirty year period? As per my post above Frank - the question is a Strawman Argument - I have answered it correctly in that the growth will be the same for both ISA and pension so the question is spurious I have also pointed out that employees pay NIC on their pension contributions. And I am genuinely concerned as we have already coverred this only yesterday 8-) 8-) 8-) 8-) But one further point re the growth and to underline the Strawman nature of your question re what would the growth be over 30 years? I would like to think it is positive - but make the wrong investment choices and it could be negative. So tell me Frank would you like to do your calculation again please but this time with:- a) The correct application of NIC for the employee and b) assume that in the year preceding the individuals retirement, we have another crisis such as we had with the banking crisis in 2008 and the markets fell by circa 40% How long would it be before the individual recouped their contributions back in those circumstances? It seems to me Frank that despite what you say - the only thing you are interested in is avoiding both reality AND the legitimate questions that would underline just how flawed your thinking is.
Guest Had Enough Posted January 20, 2014 Posted January 20, 2014 Now you are getting me worried. Let's get this straight. I am not talking about an employee paying a penny. I gave you the suggestion just a couple of posts back but here it goes again. I say to a member of staff, " I can pay you £20K or I can pay you £19K and put £1000 per annum into our company pension scheme. Technically the employee isn't paying a penny. The money is being paid by me into our existing scheme. It is in effect a non-contributory pension scheme. Are you saying that my employee will have the NI for the £1000 that the company is paying deducted from his salary? That is not what I understand. I do understand that if an employee pays his own contribution he will pay NI. So let's clear this up first shall we? Edited to say, this is what you said in response to my proposition: BUT there are some caveats that you should outline to your employee if you as the employer decide to go down that route. Yes - you as the employer would save 13.8% NIC and yes the employee would save their employees NIC as well which is a remarkably attractive proposition such that if you rebate the 13.8% employer NIC into the pension scheme as well the employee can end up having the same Take Home Pay, but a considerable increase in pension contributions. Ps And this wasn't yesterday, it was just this morning! I am genuinely concerned that you can't remember what we discussed a few hours ago!
CliveH Posted January 20, 2014 Posted January 20, 2014 Starwman again Frank - the calculations that Dave and I were talking about and indeed Capcloser first posted about was a non Salary Sacrifice Scheme. You are being more than disingenuous here if you are trying to suggest that you Salary Sacrifice Schemes were what was being discussed. But I did cover them in some detail as I have pointed out. They are schemes that require HMRC approval - Capclosers Auto Enrolment scheme from the original post is the normal standard scheme where the employee pays NIC on pension contributions. I have corrected your calculations and would refer you to the HMRC website on this matter. I include them at the bottom of this post You may feel that you can bull$hit your way out of the hole you have dug for yourself by bluff and bluster and your normal smoke and mirror nonsense but I would suggest that the HRMC website is to be believed and you are not. You are a charlatan Oh! - and by the way - if you are going to look at Salary Sacrifice - you have missed a trick in your calculations. Do some research (I have given the answer in an earlier post) but if you get stuck let me know and I will point you in the right direction. And if you do allow a salary sacrifice scheme - you should look at the implications re the employee terms and conditions of employment and Contract of Employment. If you start reducing an individuals salary it requires a new Contract of Employment. You may want to look at the HMRC website http://www.hmrc.gov.uk/payerti/payroll/special-pay/salary-sacrifice.htm ............................... I will highlight where you go wrong Frank (I use upper case for ease – not shouting okay!) "But let's get back to the original point. Your finicky comment about me not quoting the correct NIC rate has prompted me to redo the sums. I believe that employee's rate is now 12% so the £1000 I put into my employee's pension will actually only cost him £680 and not £700. PLEASE REFER TO HMRC WEBSITE – THIS CLARIFIES THAT NIC IS PAYABLE ON PENSION CONTRIBUTIONS. So we do the same sum. Assuming no fund growth he'll have £30K. He takes £7500 as a lump sum leaving £22500. His pension will be gross £1125. he has lost 30 x £680 by choosing the pension, which is £20400. WRONG! – HIS CONTRIBUTIONS ARE 30 X 800 WHICH IS £24,000 £20400 minus his £7500 lump divided by £ £1125 is 11.46. WRONG! - £24,000 MINUS HIS £7500 PCLS DIVIDED BY THE NET INCOME FROM THE ANNUITY (£1125 GROSS MINUS 20% TAX = £900) WHICH WHEN YOU DIVIDE THE NET CONTRIBUTIONS LESS THE PCLS (£24,000 - £7500 = £16,500) BY THE NET INCOME IS :- £16,500/£900 = 18,333 r Years.
CliveH Posted January 20, 2014 Posted January 20, 2014 Oh dear again Frank - not very good at getting things right today are we? I think you will find that "2014-01-19" was yesterday dear................. Is there anyone there with you that you can ask for help? CliveH - 2014-01-19 9:19 AM Oh dear! Methinks you protest too much Frank. "If a Mrs Dave, who earns a modest salary of say £20K, decides that she'd like a pension and asks her employer to put £1000 a year into a scheme, rather than take it in salary, these are the figures. " And then we have what the HMRC says 'Usually your employer takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). You only pay tax on what's left. So whether you pay tax at basic, higher or additional rate you get the full relief straightaway.' http://www.hmrc.gov.uk/incometax/relief-pension.htm But you say:- The whole £1000 will go into her pension. It will cost her £700 as she would pay £200 tax and £!00 employee's NI if she took it in salary. I'm rounding NI to 10% for illustrative purposes and to make the sums easier for you. But the reality is the employer:- ".......takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). As I say - oh dear! Take that 10% advantage that you think is there but isn't out of your calculations and you get back to the calculation that i originally stated !!! (lol) (lol) (lol) (lol) And here is another link to a site that shows you are wrong Frank! this is what it says:- "Your employer may take pension contributions from your pay before they deduct Income Tax. This is a ‘net pay arrangement’. You don’t pay Income Tax on your pension contributions but you pay National Insurance on your pension contributions. Ask your employer if a net pay arrangement applies to your workplace pension." http://www.nidirect.gov.uk/tax-relief-on-pension-contributions ........................................... What a plonker you are Frank The data is out there all over the place - and you STILL get it wrong! But you do throw up an interesting point. If Dave's wife had said to her employer that she wanted not to make the contribution in the normal way - but asks her employer to reduce her salary via "salary sacrifice" to £19,000 and then getting the employer to make an employers contribution then the employers NIC at 13.8% on that £1000 can be paid into the scheme. So if it is this that you have tried to research Frank - then nice try but you have part of the NIC 'kicker" at the wrong rate! - DOH!!!! We are doing a lot of these for people who earn too much to now be eligible for child benefit. It is a simple matter to do - BUT - it does involve the employer in a fair bit of "negotiation" with the Revenue - the scheme has to be registered and the employee has to have an audit trail of requesting such a tax avoidance scheme. They have to enter it on their tax return as such a scheme But keep trying Frank! You must be learning a lot!
Tracker Posted January 20, 2014 Posted January 20, 2014 Sooner or later one can only hope that Clive and Frank will learn to coexist in peace by each treating the other with a modicum of courtesy? Sooner or later we can only hope that the one will stop baiting the other - please? And do you really need to keep repeating each others postings in full just to make a minor point - had you ever considered editing out some of it as all this same old same old is making the following of the thread much less easy than it should be?
Guest Had Enough Posted January 20, 2014 Posted January 20, 2014 CliveH - 2014-01-20 6:42 PM Oh dear again Frank - not very good at getting things right today are we? I think you will find that "2014-01-19" was yesterday dear................. Is there anyone there with you that you can ask for help? CliveH - 2014-01-19 9:19 AM Oh dear! Methinks you protest too much Frank. "If a Mrs Dave, who earns a modest salary of say £20K, decides that she'd like a pension and asks her employer to put £1000 a year into a scheme, rather than take it in salary, these are the figures. " And then we have what the HMRC says 'Usually your employer takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). You only pay tax on what's left. So whether you pay tax at basic, higher or additional rate you get the full relief straightaway.' http://www.hmrc.gov.uk/incometax/relief-pension.htm But you say:- The whole £1000 will go into her pension. It will cost her £700 as she would pay £200 tax and £!00 employee's NI if she took it in salary. I'm rounding NI to 10% for illustrative purposes and to make the sums easier for you. But the reality is the employer:- ".......takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). As I say - oh dear! Take that 10% advantage that you think is there but isn't out of your calculations and you get back to the calculation that i originally stated !!! (lol) (lol) (lol) (lol) And here is another link to a site that shows you are wrong Frank! this is what it says:- "Your employer may take pension contributions from your pay before they deduct Income Tax. This is a ‘net pay arrangement’. You don’t pay Income Tax on your pension contributions but you pay National Insurance on your pension contributions. Ask your employer if a net pay arrangement applies to your workplace pension." http://www.nidirect.gov.uk/tax-relief-on-pension-contributions ........................................... What a plonker you are Frank The data is out there all over the place - and you STILL get it wrong! But you do throw up an interesting point. If Dave's wife had said to her employer that she wanted not to make the contribution in the normal way - but asks her employer to reduce her salary via "salary sacrifice" to £19,000 and then getting the employer to make an employers contribution then the employers NIC at 13.8% on that £1000 can be paid into the scheme. So if it is this that you have tried to research Frank - then nice try but you have part of the NIC 'kicker" at the wrong rate! - DOH!!!! We are doing a lot of these for people who earn too much to now be eligible for child benefit. It is a simple matter to do - BUT - it does involve the employer in a fair bit of "negotiation" with the Revenue - the scheme has to be registered and the employee has to have an audit trail of requesting such a tax avoidance scheme. They have to enter it on their tax return as such a scheme But keep trying Frank! You must be learning a lot! And I refer you to my post of 8.13 a.m today in which I outlined a scheme were I pay my staff a bit less and put the difference into our company pension scheme. You replied shortly afterwards and said: 'BUT there are some caveats that you should outline to your employee if you as the employer decide to go down that route. Yes - you as the employer would save 13.8% NIC and yes the employee would save their employees NIC as well which is a remarkably attractive proposition such that if you rebate the 13.8% employer NIC into the pension scheme as well the employee can end up having the same Take Home Pay, but a considerable increase in pension contributions. ' Now that was just a few hours ago Clive - is your memory failing? And why are you being so nasty about this? All I'm trying to do is get itv straight as you don't appear to know which proposition you're responding to. Please go back to this morn ing and start again! So it would appear that I can say this to my staff and I'll be grateful if you'll tell me that I'm wrong, if I am! Dear staff member, I can if you like give you your rise of £1000 or we can put £1000 into our company pension scheme as an employer's contribution. This will only cost you £680 because if you draw the £1000 you'll pay £200 tax ans £120 N.I. Just as an example, in thirty years assuming that your fund hasn't grown, which is unlikely, you will have £30K in your pension pot. You can then take £7500 as a tax free lump sum and hopefully get at least a 5% annuity on the balance. This assumes that there will be no change in the current rules of course. Your pension will in effect have returned everything that you have paid in just over eleven years. And of course if your fund has grown you'll have a bigger lump sum and a larger pension. You may be subject to income tax on the pension but that all depends on your total earnings of course." Now Clive, this morning you said it was a good idea and even suggested giving the employee some of our 13.8% NI that we won't have to pay, which would make it even more attractive. Please tell me if there are any flaws in this!
Guest Had Enough Posted January 20, 2014 Posted January 20, 2014 Tracker - 2014-01-20 7:14 PM Sooner or later one can only hope that Clive and Frank will learn to coexist in peace by each treating the other with a modicum of courtesy? Sooner or later we can only hope that the one will stop baiting the other - please? And do you really need to keep repeating each others postings in full just to make a minor point - had you ever considered editing out some of it as all this same old same old is making the following of the thread much less easy than it should be? I'm not baiting him and I'm not the one calling him a charlatan and a plonker and continually telling him that he's learning from me! He is really rattled which is sad as there's no need.
Dave225 Posted January 20, 2014 Posted January 20, 2014 CliveH - 2014-01-17 8:59 PM Dave - how can you say that annuities of 5% give you back your money in circa 11 years? If you have built up a fund of £100,000 then a 5% annuity will give you £5000 pa. £100,000 divided by 5% = 20 so it will take 20 years to return your capital. Contrast that to the 1990's when i was writing annuities at 11% for level annuities and about 7% if you wanted reasonable inflation proofing and you can see the reality. With a 10% annuity you have regained your capital back in ten years - anything after that you are in profit. And your ISA analysis is only correct if you limit your self to cash ISA's - If you utilise the same funds as you would in a pension then ISA's always come out on top! And this is easily achieved. Compare and contrast:- Pension :- Tax relief on the contributions - so 80p becomes £1 for a basic rate tax payer Dividend growth within the fund is taxed 25% of the fund can be taken as Tax Free cash The income taken is taxable The return on death of last surviving spouse is zero for an annuity and 45% of the fund via Drawdown ISA No tax relief on contributions - so if you invest 80p - then 80p gets invested. Dividend growth within the Fund is taxed The entire pot can be taken as tax free cash The income you take is both free of Income tax and CGT The return on death is 100% of whatever is invested. ..................................... Whatever spread sheet you use - 5% annuities will take 20 years to return the capital. However you look at it - ISA's are the mirror image of Pensions - thus the overall tax advantage is about the same. Namely - with a pension you get 1) tax relief on the contributions, 2) the fund growth is taxed but 3) you pay tax on the income you get in retirement Whereas with an ISA you get 1) No tax relief on the contributions 2) the fund growth is taxed but 3) you pay no tax on the income you take in retirement So with a pension you can end up with a bigger fund that simply puts more money in the tax mans pockets when you die Whereas you end up with a smaller pot with an ISA because there is no tax relief on the contributions - BUT - there is no tax on the income that you take so the net gain to the individual is virtually the same. But when you die and ESPECIALLY if you die early - a pension annuity gives all your money to other people who are lucky enough to live longer than you, - whereas with an ISA portfolio - the entire sum gets distributed to your loved ones. You can gain some advantage if you have a pension pot by using drawdown - but the tax man changed the rules such that he takes 55% now on death of last surviving spouse. (it used to be 35%) Even if your 5% annuity rate is the net rate (after tax) for a basic rate tax payer (as most are in retirement) this would mean the gross annuity rate would be 6% And a 6% gross annuity - even if you were a non tax payer in retirement would still take 16.66 years to return your capital to you - which is where the 17 years i quoted previously comes from. If you could let me know what annuity provider you wife is using such that her capital sum is returned in just 11 years - would you please let me know - I have clients that would VERY much like to take advantage of such an offer! Not trying to be clever of flippant Dave - but seriously - pensions - unless you fit a certain set of parameters are really not the best option. Like I say - most people when we sit them down and go through all the parameters of pensions vs the other options and people chose pensions ONLY when they are HRTP or the employer makes substantial contributions. Oh boy!!! You have a quiet weekend watching the telly, and you come back to 2 pages of argument. OK, I went back and re looked at my spreadsheet. What my dear wife did, on my advice was to take 25% as a tax free sum, and then the rest as an annuity on single life. Doing joint life on such a small sum was not really relevant and being morbid, I expect her to outlive me. Adding up what she will receive in monthly payments assuming she lives beyond the guarantee period means that in year 10 to 11 she passes the point where she has taken back everything she personally put in. If she lives for 20 years she will have doubled the money put in, and I sincerely hopes she does, so she does get back more. You are looking at things in a very narrow frame of mind, Clive and I must admit to being surprised at that. She did not put all her money in the day before she retired, it had been in over a good number of years and so did have some albeit limited growth. She also did not put in 100% as I am sure you know so as I have stated several times we base the return on what she has actually put in, not necessarily the value of the pot. This is something I again am surprised you as a IFA do not highlight to your clients when asking them to make investments. After all I cannot see any of them giving you money if there is no potential growth. You mention there is no tax on payments from an ISA and that is true but again the tax on 1.6% is what?? 0.32%, hardly the difference between life and death. Even on the aforementioned £18000 that equates to £288 per annum income and if not in an ISA would result in £57.60 tax per annum. Again, I may have mentioned my wife spent many years not working as she followed me to the ends of the earth so her income has never yet breached the tax threshold. I have topped it up in other ways and yes, we did look at sheltering these in an ISA but comparing the annual costs against the tax benefit was not economic as long as she was careful. Even Capital Gains tax was not an issue especially as we did make some mistakes along the way, so why pay for an investment ISA when it does you no good? Fortunately her other investments have returned an annual average of 5% tax free income over the last 15 years, so on average not too bad. We could have done better of course but why have earned money if you cannot spend it, I ask? We have never used Funds as these always have charges. I never like anything where they charge you if it goes up, and also charge you if it goes down. I can charge myself to do exactly the same. My wife's pension fund had no charges whatsoever as it was a cash pension fund. If there was interest, it went up, if not it stayed the same. However, again we are talking very small sums being involved and it was really the thought of how to utilise the small sum that made us look at the annuity angle. Again, I did the numbers and suggested we top it up and take the return. Again, this was partly a social thing as I wanted my wife to know exactly what she was getting, especially if I was no longer around. She will have enough things to contend with. I have stated on this Forum under several topics that there is always more than one way to skin a cat, and doing your own homework invariably does you as good as a 'professional' or maybe slightly worse, but no charges are ever involved. Paying someone 5% per annum to track the Footsie does not seem sensible to me. Other eamples like energy bills crop up at various times with various ways put forward to mitigate these. Some look at solar panels others windmills, I did another way and currently get 80% of my total energy bills paid for me. It cost me less than solar panels but some may not like the way I did it. That is my choice. I may even get more than the money I spent back at a future date, if things go well. Everything is a gamble. The solar panel chap may find his panels failing after a few years and have to replace them, at more cost and the rules on the rebate can be changed at the whim of a Government, so again you take a gamble. Again I have always stated spread the choices so if one does go belly up, it is not a disaster. One thing that does surprise me Clive is that you have come out so anti pensions when I have to think that these Schemes must have been part of your business over the last decades. Dare I suggest your customers may not be so impressed if they find you are now denigrating some of the very Schemes you probably asked them to invest in many years ago and one has to also enquire as to whether any commission was forthcoming for the advice. After all you are a businessman, not a charity, and rightly so. I speak as one who ditched his IFA (nice guy, but) in 1997 when I discovered the commissions he had received on the so called advice he had given me. Mis selling was not in vogue back then, so I did the next best thing, and walked away. I agree fully you cannot foresee the future and if interest rates rise again then annuities may recover and come back into fashion, I do not know. Obviously will not make any difference to us, we have what we have. However, you never know tulip bulbs may be the next 'not to fail' bet. Oh, damn they have already done that one. So, we have been through endowments, PPI and now pensions and what happened to Horace forever telling us 'to get the strength of the insurance Companies around you'? Mmmmm!! Anyway, I will leave it to you and Frank to sort out the world's problems.
pepe63xnotuse Posted January 20, 2014 Posted January 20, 2014 I suppose at least Clive isn't doing all this whilst he's on his holiday :-S ...I though H'E' was in Morocco?. If he is, judging by the amount of time and effort he's dedicated to pawing of Clive's posts and links, I can only assume that it must be shut! (lol) Come on chaps..it's getting you nowhere (..neither of you is going to "admit defeat") and it is making you look REALLY silly! .... ;-)
globebuster Posted January 20, 2014 Posted January 20, 2014 Couldn't agree more Pepe (lol) One of you just can't help getting sucked in, whilst the other appears to be a rather unsavoury individual, and has such an incredible ego for an eight year old :-( - [i'm just guessing on the age - maybe nine at a push?] still, when you get to 'big' school some of the older boys might teach you a lesson 8- )
Guest Had Enough Posted January 20, 2014 Posted January 20, 2014 pepe63 - 2014-01-20 8:39 PM I suppose at least Clive isn't doing all this whilst he's on his holiday :-S ...I though H'E' was in Morocco?. If he is, judging by the amount of time and effort he's dedicated to pawing of Clive's posts and links, I can only assume that it must be shut! (lol) Come on chaps..it's getting you nowhere (..neither of you is going to "admit defeat") and it is making you look REALLY silly! .... ;-) Yes and having a great time but there's not a lot to do when you're on a campsite in the middle of nowhere on the edge of the Sahara. Thank God for my Maroc Telecom dongle!
antony1969 Posted January 20, 2014 Posted January 20, 2014 There's a rumour doing the rounds Corrie's Hayley joined Chatterbox today , I presume she must have read this thread and just given up all hope . At least the pain and hurt is gone now and she wont suffer anymore , oh and the cancers gone too .
CliveH Posted January 21, 2014 Posted January 21, 2014 The reason why - as an IFA I do not think that pensions are a good thing for most people is because he Governments have over the last few decades reduced the overall tax efficiency to a remarkable degree BUT at the same time steadily increased the Tax Free Savings options via PEP's initially and now ISA's. Frank I covered the advantages of Salary Sacrifice on the 19th at 0919 hrs - you obviously did not read or understand it and so I repeated the info the following day after you had "caught up" The problem with what you say is that, once again you try to mix and match the "rules" - When an employee makes a contribution from their salary to a pension the NIC is payable on those Contributions. Whereas if the employee sacrifices Salary and gets the employer to make the contribution, then BECAUSE they have sacrificed salary, the employee is NOT making the contribution - the employer is. If you want to do this - it has to be at the request of the employee because of the significant lowering of salary related benefits the employee suffers, such as lower DISB, Lower S2P provision, reduced salary related borrowings. Try to introduce such a scheme without your employees permission and you could land yourself infront of an Industrial Tribunal because the scheme has to be reflected in their Terms and Conditions of employment and it has to be approved by HMRC. May be you had not realised Frank but if you pay your staff overtime - are they going to be pleased to have their overtime rate based on a lower salary because you as the employer want to save 13.8% on every £1 you pay them? That said - they are worth considering and I am pleased that you are getting up to speed on this - because as I said before - I am surprised given what you say about what you are and what you do that your knowledge was so poor in this area. But let me ask you something about your calculation ........................ Why would it not work re the employees NIC for someone earning, say £45,000 a year and wishes to sacrifice £1000. ? ......................... Here is a link to the HMRC website on the various Salary Sacrifice options http://www.hmrc.gov.uk/specialist/salary_sacrifice.htm and a more specific one re pension related salary sacrifice and the rules (Section 62 ITEPA 2003) you as the employer must follow http://www.hmrc.gov.uk/manuals/eimanual/eim42750.htm Dave I am genuinly pleased that by your calculations your wife gets such a good return on her contributions. The reason why I as an Adviser do not "inflate" the benefits of pensions is because it would be wrong to do so and I would get taken to task by our Compliance Team and indeed the FCA if i were to so do. And I am still intrigued by your calculation that the return period is just 11 years - this seems to be very optimistic and if i were to quote that when talking to clients about pensions I would certainly get my nuts squeezed by our compliance people! Part of the reason why your return may be as high as you say is that your wife selected a single life annuity. For most couples this would be very bad advice indeed. Let me cite an article from May last year that outlines the issue:- " Regular readers may have guessed by now that I am talking about the scandal that six in 10 married men buy a single life annuity when they retire. Before your eyes glaze over, let me explain that an annuity is a form of guaranteed income for life which more people will rely on in future as final salary or defined benefit pensions become extinct in the private sector and are replaced with money purchase or defined contribution schemes. " AS AN ADVISER - I CANNOT RECOMMEND A SINGLE LIFE ANNUITY TO JUST ONE SPOUSE AND IF THEY INSIST WE HAVE TO GET THEM TO SIGN A LETTER STATING THAT WE DID NOT RECOMMEND THIS COURSE OF ACTION. NOT TO DO SO WOULD MAKE US LIABLE IN LAW FOR ANY SHORTFALL ON THE DEATH OF THE SINGLE ANNUITANT. The scandal of single life annuities is covered in the Telegraph article:- http://blogs.telegraph.co.uk/finance/ianmcowie/100024578/why-wont-regulators-act-to-end-the-multi-billion-pound-scandal-of-widows-without-pensions/ Admittedly - this is primarily about married men choosing the annuity but now we have unisex annuities the problem works both ways. ISA's Dave - you refer only to Cash ISA's and not Investment ISA's which are the "mirror image" of pensions. I have covered this at length in a previous post. You cannot compare the returns from Pension Funds to those of a Cash ISA - but the returns from an Investment ISA is directly comparable because the tax treatment of one is the reciprocal of the other. Dave - may I suggest you read the "This is Money" article on this very subject:- http://www.thisismoney.co.uk/money/pensions/article-1699680/Pension-vs-Isa-The-big-debate.html And if you refer to the Comments section - the first one sums up my position as an Adviser very well! :-S I quote:- "tonymciob, Norwich, United Kingdom, 10 months ago My wife's recent pension statement from Standard Life quotes that they will have returned all of her fund by the time she reaches 97 years old. So when she reaches 100 she will definitely be on a winner! So have I got this right?.........they are planning to give HER money back over 32 years. Sounds like a good deal if you're the CEO of an insurance company. Am I missing something here? So whilst I am pleased Dave that you and your good lady are happy with how your wifes pension is performing - I have to say you are HIGHLY unusual in this. Tonymciob - is more typical
Guest pelmetman Posted January 21, 2014 Posted January 21, 2014 Interesting Clive ;-)...............so my £34,000 private pension pot paying me £150 ish a month will pay back in less than 19 years..............so by the time I'm 74 I'll be drawing from those who didn't get to use up their pot of dosh :-S.......................makes yer think don't it :-| ..........
derek pringle Posted January 21, 2014 Posted January 21, 2014 Hi, The sad thing for most people is that that the goal posts have been moved on them without by their employers leaving them in a vulnerable position re pensions and not able to do much about it. By this I mean where people have been working many years for companies under Final Salary Schemes only to find that the Company changes to a Defined Contribution Scheme, leaving the employee not getting the 30 or even 40% of final salary as a pension but a very low paying annuity. Self employed can determine a little more their pension arrangements whereas an employee is by and large 'tied.If you join a Defined Contribution Scheme you need either lots of years to contribute or maximum contributions otherwise the return will not be much good. When members on here talk about 11 or 12% annuities that was in the days of very high interest rates, the figures may have been higher under Mrs Thacthers govt. I can not see decent annuity rates coming about under present times. 10% annuity on a small pot still is not a good pension. cheers derek
CliveH Posted January 21, 2014 Posted January 21, 2014 That is correct Dave. And this is the problem - When annuity rates were circa 10% in the 1990's - Pensions worked well. Even ignoring the PCLS, a 10% annuity paid you back your "pot" in 10 years. After that your "pot" was technically exhausted and so any income paid to you after that could be seen to be from the residual pots of those who sadly "did not make it". But the higher annuity rates of the past go a long way to answer Dave's point about why we Advisers have "changed our tune" (my words) over pensions. Other factors are the various Tax hits pensions have had applied to them and the restrictions placed on access. With annuity rates being so low now, the calculations that we have to do to explain to our clients how the darn things work clearly show that as in Tonymicob's comment I cited:- "tonymciob, Norwich, United Kingdom, 10 months ago My wife's recent pension statement from Standard Life quotes that they will have returned all of her fund by the time she reaches 97 years old. So when she reaches 100 she will definitely be on a winner! So have I got this right?.........they are planning to give HER money back over 32 years. Sounds like a good deal if you're the CEO of an insurance company. Am I missing something here? " most people are not impressed with how THEIR pot is returned to them. In Tonymicobs case above - I would suggest that the fact that his good lady probably has to live longer than her Life Expectancy just to get her own "pot" of money back is leading him and many other people to question the wisdom of putting all your eggs in a pension basket. But like all things - some people cannot see the wood for the trees! - and the other saying "You can lead a horse to water..... etc" all apply here.
CliveH Posted January 21, 2014 Posted January 21, 2014 derek pringle - 2014-01-21 9:25 AM Hi, The sad thing for most people is that that the goal posts have been moved on them without by their employers leaving them in a vulnerable position re pensions and not able to do much about it. By this I mean where people have been working many years for companies under Final Salary Schemes only to find that the Company changes to a Defined Contribution Scheme, leaving the employee not getting the 30 or even 40% of final salary as a pension but a very low paying annuity. Self employed can determine a little more their pension arrangements whereas an employee is by and large 'tied.If you join a Defined Contribution Scheme you need either lots of years to contribute or maximum contributions otherwise the return will not be much good. When members on here talk about 11 or 12% annuities that was in the days of very high interest rates, the figures may have been higher under Mrs Thacthers govt. I can not see decent annuity rates coming about under present times. 10% annuity on a small pot still is not a good pension. cheers derek Correct Derek - the meddling in pension rules has been the death knell of the FS scheme (Defined Benefit) and many are now stuck with the second rate Defined Contribution schemes. As for the 10% annuity on ANY sized pot - J H C !!!! - but I would LOVE to get back to the days when I could write a double digit annuity for my clients! Now 6% gross is the max. and if you want inflation proofing then the initial rate falls to about 3% and if your spouse is younger than you the rate is based on THEIR age not yours and this can lower the initial rate still further. This is why some Men take the single life annuity because putting their spouse into the equation "costs" too much in their eyes. Sadly - this often means that if they pre-decease their wives - the surviving wife gets nothing! But when you come to take the benefits from your pension pot - you literally "pays your money - you take your choice" 8-)
CliveH Posted January 21, 2014 Posted January 21, 2014 pelmetman - 2014-01-21 8:51 AM Interesting Clive ;-)...............so my £34,000 private pension pot paying me £150 ish a month will pay back in less than 19 years..............so by the time I'm 74 I'll be drawing from those who didn't get to use up their pot of dosh :-S.......................makes yer think don't it :-| .......... Yes it does dave - and sadly if you and your good lady die before you reach age 74 your remaining pot will go to someone else's annuity. Gives you a warm glow of humanity does it not ?
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