Drawing Pension at 55

[ChrisR]

Yes good advice from COnny (afaik!).
Couple of things - If you transfer the lump to another pension company, you can put it into something which can have earning potential. Don't just let it sit. I have some in a not very risky stock related thing which went from 6xx to 7xx in the last year.

After taking to PensionWise, you would probably learn useful stuff from eg Hargereaves Lansdown. They will not of course give free "pension advice" but they WILL tell you about the possibilities they can provide - and they can provide a wide range. I'm not particularly suggesting you should put any money with them. They will answer, "Suppose I did xyz?" questions.

Before you stop paying NI, make sure you have enough credits to get you full pension at 68 or whenever it will be for you. That's one phone call; they will write to you in a few days if they don't have your case details ready. It can depend if you ever contracted in/out, etc in the past. If, say you're a few years short you can pay. One way is to "become self employed" where the Class 2 NI contributions for small earnings are £3.05 a week, but your years will add up.

If you aren't earning anything much and are therefore paying little or no tax, surprisingly it can make sense to pay £2880 into a pension every year, until you're 70.
Because - If you pay that in, HMG will add the tax % (using words loosely here) so it gets upped to £3600. You can take that out gross after a year, and only pay tax if you're over your personal allowance. Ask HL about that, they will tell you ins and outs. You can have as many pensions as you like.

 

[Mottie]

You can check your state pension online too. https://www.gov.uk/check-state-pension

Mine says I should be getting £211.80 per week which is the maximum I can get. If you are short, it will tell you.

 

[conny]

One other thing I learnt from Pension Wise. It is ILLEGAL to cold call people about investing in pensions or investment schemes.
They can advertise, and this is where the scammers have the upper hand. They make their 'schemes' look either, 'attractive', 'very attractive' or 'mind blowing'!
Obviously the mind blowing is a definite stay away in my opinion but it is the 'attractive' ones you need to be very, very careful of. Basically once they have 'sucked' you in it's not very long before you realise/discover you have been fleeced.
As the saying goes, "If it seems too good to be true then it probably is." And don't fall for these 'I made 20k in 6 months by investing with (insert any celebrity name).

 

[conny]

You can check your state pension online too. https://www.gov.uk/check-state-pension

Mine says I should be getting £211.80 per week which is the maximum I can get. If you are short, it will tell you.

Mine is £219.05 per week from next August. How come you are short? Have you missed any payments? They can be made up by paying extra before starting to draw it.
I have 49 years full payments.

 

[Mottie]

Mine is £219.05 per week from next August. How come you are short? Have you missed any payments? They can be made up by paying extra before starting to draw it.
I have 49 years full payments.

No, it says "You cannot improve your forecast any more". No missing payments. I know it’s more than some others can get as the maximum because, unknown to me, my first job had something to do with SERPS, or some other acronym. Perhaps you paid a couple of more years into that that I did? I won’t be getting mine until November 2023.

As an aside, a bloke I know, 73 years old, had never taken his state pension as he didn’t need it. He still works although just part time now installing swimming pools and he runs the shoot where I go with my dog. He was contacted by HMRC and said he could have a lump sum. Including interest, he got a payment for just over £69k from them! He's just treated himself to a new shotgun and gave £35k for a car he's wanted since his twenties - an Austin Healey 3000 that he bought from the original owner. He only had it delivered two days ago and pushed it into his garage - it’s not been run for 3 years. Should be fun seeing him get in and out of it - he's put on a bit of timber since his 20's!

 

[Ihavenojob]

My state pension forecast is £154 a week, if I paid the full whack, it will be £179. The extra amount to pay to receive the full amount I will need to pa around £4.5k in voluntary contributions, so to benefit, I would have to live around 3.5 years after taking the pension to break even.

 

[Mottie]

If only we knew when we were going to die, we could plan better!

 

[ellal]

If only we knew when we were going to die, we could plan better!

I've got approximately £950k in pension pots/investments/currencies, and still rising...

Because unlike some 'older folk' (spivs?), I choose to work when/wherever I can rather than be a burden on the taxpayer...

And there's plenty of life left in the can

 

[Mottie]

I've got approximately £950k in pension pots/investments/currencies, and still rising...

Because unlike some 'older folk' (spivs?), I choose to work when/wherever I can rather than be a burden on the taxpayer...

And there's plenty of life left in the can

Good for you. Who hasn’t these days? Fingers crossed you don’t die of Covid before you get to use it.

 

[foxhole]

I took 25% (how refurb needed it )then converted rest to a draw down pension, I like being able to have access to as much or little Of it as possible ..

 

[ReganAndCarter]

I'm turning 55 in October.

So am I. Spooky!

 

[JP_]

My dad was 80 last week. He got a letter from he government to inform him his weekly pension was going up by 20p a week! We decided the best option was to save it all year and get a nice bottle of wine.

 

[ellal]

Good for you. Who hasn’t these days? Fingers crossed you don’t die of Covid before you get to use it.

Very little chance of dying of the 'virus', although now a much greater chance of dying in the future whilst on an NHS waiting list due to the consequences of said 'virus'...

"More patients are opting to pay for expensive life-saving surgery because of crippling NHS waiting lists, it has been reported.
So-called "self funded operations" have risen since the beginning of the pandemic, according to private providers.
And some patients faced with lengthy waiting lists say they have to pay for heart operations that can cost as much as £20,000.
The NHS waiting list in England has ballooned to 5.3 million, including nearly 4,000 patients who have been waiting for two years."

 

[Mottie]

Very little chance of dying of the virus,

Tell that to the relatives and those that have treated and buried 4.6m that have died of it worldwide so far…..

 

[JohnD]

I took 25% (how refurb needed it )then converted rest to a draw down pension, I like being able to have access to as much or little Of it as possible ..

once you go into drawdown, all the income is taxable, and you can only make small contributions to the pension scheme if, say, you start earning again.

Because income from a pension is taxable at your highest marginal rate (and income from an ISA is not), I recently started Partial Encashment from my main scheme. You can take out a "one off" withdrawal, of which 25% is tax free, and the rest is taxable. It is not the same as drawdown.

Next year you can have another, with another tax-free slice, and, with luck, the fund will have grown over the year. My growth over the last year was quite good.

Any spare goes into an ISA, where future income or withdrawals will be tax free.

I found it convenient to do it right at the end of the tax year, when I knew what my taxable income was.

It reduces the risk I might need to take out a big wedge and pay a lot of tax on it.

If you were retiring from work, you might want to limit or pause your pension payments until the beginning of the new tax year, when you might be in a lower band.