TAX BOMB.

[no country members]

Start taking it out at age 67. How fast can you take it out? In fact, can you get to take it all out at all? After the lump sum, your tax advantage is negative because you pay tax on all those lovely gains.

You can start taking it out at age 57 or younger for some. You also retain your personal tax allowance after taking the 25% tax free element.

Have you spoken to an IFA? First consultation is normally free.

 

[no country members]

I know the "official" explanation and accept that HMRC views all incomings as income but my point was that the reason politicians describe the state pension as a benefit is because they would dearly love to make it means tested only but daren't because it would be political suicide - at the minute!
They're going to be dumped anyway at the end of their term if not before. The alternatives aren't appealing either however.

I think state pension will be means tested eventually. I've worked on the assumption that I won't get it for the last 25 years.

 

[Johnny Rogue]

This is only literally half a story. With all that money, now let it grow! Start taking it out at age 67. How fast can you take it out? In fact, can you get to take it all out at all? After the lump sum, your tax advantage is negative because you pay tax on all those lovely gains. They are not taxed in the ISA.
If you die and the person getting the pension already pays 40% tax, the overall tax rate is 64%. Work out how fast you can withdraw the pension money without a 40% tax rate.
What counts is not what you end up with, but how much can you actually get out, compared to what you put in. And that sum has to be done allowing for inflation. In many years, at the end I found to my horror that my pension fund was worth LESS than at the start of the year, despite making payments in.
And I did say at the start of this that someone going the ISA route can negotiate a higher salary with an employer to make up the employer contribution.
ISA charges are generally much lower than pensions, where the industry is expert at hiding what they take. "Funds" are proven, on average to do much worse than a monkey with a dart board. Not urban legend, Proven fact. And when you have it, you can spend the lot.

I have an ISA, a very small old private company pension that I no longer pay into, and a public sector pension.

Both pensions out performed my ISA when you take into consideration employer contributions and the fact that I paid no tax or national insurance on the contributions.

When I'm 57, I get to withdraw 25% tax free, and then receive a reasonable income from them, for life.

It doesn't really matter to me how much of the money I'm able to re-coup, just as long as I'm able to live comfortably while I'm alive,

What you have to consider with work pensions is that the majority of the money in that pension pot has been paid in by your employer and not come directly from your pocket. Whether you're in the pension or not, you still get paid the same amount each year.

An ISA is a flexible way to save, giving you better access, but that can also be the issue. So many people end up working their way through savings, well before they kick the bucket.

I would always take some independent financial advice though.... there's a lot of internet experts out there spouting any establishment anti government rhetoric... and then there's Bob down the local, who knows it all too!

 

[Lons]

I think state pension will be means tested eventually. I've worked on the assumption that I won't get it for the last 25 years.

Yes I agree.

 

[Rudolph Hucker]

You lot have fried my brain 20% this 45% this + you can take this but if you got more than this etc.
All i know is we are being robbed of our money,we have worked hard for & tried to save for our future.
Whatever government is in power,we will still be overtaxed,someone has got to pay their wages,their second homes & expenses,there ridiculous ideas
i.e Rwanda cost the the taxpayer £85 million for what & other crap they come up with.And the problems this country is facing with illegals.
Enough said

They make it as complicated as possible so that the little folk can't play their game and occasionally win. If we've got it, they want it. If we haven't got it, they want us in debt to them if possible

It doesn't matter who gets voted in - that's how it will always be

 

[Readie]

I know the "official" explanation and accept that HMRC views all incomings as income but my point was that the reason politicians describe the state pension as a benefit is because they would dearly love to make it means tested only but daren't because it would be political suicide - at the minute!
They're going to be dumped anyway at the end of their term if not before. The alternatives aren't appealing either however.

Yes I agree too.
They want to make it means tested and as such there was a move in parliament for them to have access to everyone’s bank accounts, which I believe was avoided.
It was floated as catching benefits fraud…. Yeh right…

They know if you have savings producing taxable interest though as they receive your savings P60 in effect.

 

[2506sendero]

there was a move in parliament for them to have access to everyone’s bank accounts, which I believe was avoided

Yes, i can remember that, and it made for real scary shit

 

[Crackerjack]

Yes, i can remember that, and it made for real scary shit

But they do know every penny that u have earned in interest. I had an account that paid me £3.85 interest in a year, that I wasn't even aware off, but the Tax man not only told me about it, but made sure he took the 77p tax out of it !

 

[no country members]

But they do know every penny that u have earned in interest. I had an account that paid me £3.85 interest in a year, that I wasn't even aware off, but the Tax man not only told me about it, but made sure he took the 77p tax out of it !

Yes banks and building societies now tell HMRC about any interest you earn across your accounts each year (around November I believe) and if it's under £10k they adjust your tax code and recover it via PAYE. If it is over £10k you must do a self assessment tax return.

 

[nevadacowboy]

I have an ISA, a very small old private company pension that I no longer pay into, and a public sector pension.

Both pensions out performed my ISA when you take into consideration employer contributions and the fact that I paid no tax or national insurance on the contributions.

When I'm 57, I get to withdraw 25% tax free, and then receive a reasonable income from them, for life.

It doesn't really matter to me how much of the money I'm able to re-coup, just as long as I'm able to live comfortably while I'm alive,

What you have to consider with work pensions is that the majority of the money in that pension pot has been paid in by your employer and not come directly from your pocket. Whether you're in the pension or not, you still get paid the same amount each year.

An ISA is a flexible way to save, giving you better access, but that can also be the issue. So many people end up working their way through savings, well before they kick the bucket.

I would always take some independent financial advice though.... there's a lot of internet experts out there spouting any establishment anti government rhetoric... and then there's Bob down the local, who knows it all too!

I didn’t know you frequented the same pub as me

Bob

 

[Patrick]

Well if you need advice on income tax savings etc it's probably better to get professional advice from the appropriate source i.e a tax expert/financial advisor rather than listen to someone down the pub or on this forum unless of course they actually happen to be tax expert or financial advisor as their profession and where financial advice and financial advisors are concerned those that offer free advice get their income from commission so any advice they give will be biased and not impartial.
Where tax is concerned it's not unknown for so called experts to get it wrong on the odd ocassion.