As I approach 55, and the first opportunity to take my Defined Contribution pension, I keep going back to the same questions about pensions that I feel I should either find out more about, or make a decision on. I’ve listed them here, not necessarily looking for answers, just trying to get them out my system:
Do I take my DC pot at 55, even if I don’t retire then?
This is so I can get my hands on the 25% tax free sum, before the Government come in and reduce it. When it comes to pensions we almost all take it as read that the endless tinkering on this potential cash cow by whichever bunch of inadequates happen to be in power will just never stop. But why? Why can’t they leave us in peace and let us do our sums against a background of stable assumptions?
If I do take my 25% cash Lump Sum, do I “recycle” it back into personal SIPPs to get some tax relief?
This is where pensions begin to get complicated – even when you’re trying to keep it simple. There’s also a “moral and ethical” aspect to doing this which, frankly, as long as I’m not breaking the law, I’ll consider for all of two seconds before I do it. My bigger problem, I feel, will be “Can I be bothered”? working it all out and then taking the necessary administrative steps. Which leads me to my next question:
Do I get Professional Pensions Advice?
Can I get it for free, is my rejoinder to that one. Isn’t all relevant information available on the internet anyway? Of course – but how much of it is “fake news”? There seem to be so many shades of pension options that I’m never sure if what I’m reading applies exactly to me. It’s like when the newspapers do those tables of how the budget will affect you, and they pick about six different groups – singles, married couples, pensioners, students and so on – estimating their incomes and expenditures. Never once in history has any one of these sub-groups applied exactly to my situation.
Assuming I take my DC pension at 55, and my cash free lump sum, how much then do I drawdown?
Firstly, what are the damn rules on drawdown? What’s the minimum I can take a year? What’s the maximum? Will I still be working? Is it beneficial to continue working? Should I go part time? If so, what’s the most tax efficient approach?
Am I in danger, when taking all my pensions into account, of exceeding the Life Time Allowance?
Absolutely no idea. I’ve taken the “protection” available, although I’m not quite sure what this means. I can’t seem to get an estimation of what my Defined Benefit pot is worth, or will be worth when I decide to take it. I’ve written three times to the provider to get some guidance only to eventually be informed of a sum of money that I’m due per annum. But is that if I took it at “normal retirement age”? And is it in today’s money? No lump sum options are given either. I used to get a really clear statement every year about this pension. Now I have to write and then wait two months for a rubbish response.
How much will I need to live comfortably in retirement anyway?
Well, I’ve come to answer on this one. It’s: How long is a piece of string?
What’s the best Spreadsheet to estimate (a) what my pensions will be worth and (b) how I might take them over thirty years?
An easier question might be how many spreadsheets do I have trying to work through these scenarios? I’m only certain that it’s too many. I do have a “definitive” effort sitting on Google Docs, but that only serves as the model that I compare all the others to. It will also only be “definitive” until I find one that I think surpasses it (i.e. gives me a better outcome).
Will the State Pension be means tested by the time I get there?
If there’s anything that the last General Election taught us it was that if you mess with Pensioners benefits they will vote you out of office. They won’t even give up on a free bus pass, for Gawd’s Sake, so no, I predict that this isn’t about to happen anytime soon.
What are the rules when it comes to pensions and inheritance?
Answering this question means I have to contemplate the fact of my own death. Which I currently refuse to do.
Haven’t I anything better to do with my time?
This is always my final pension question after hours of wrestling with the above ones.