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Should I start a private pension

(17 Posts)
spinduffy Fri 25-Aug-17 05:58:09

I am 39 and earn about £110k through an NHS salary and some private work.

I have about £150k in investments and own a buy to let, the mortgage on which should end in 10 years.

I make a full contribution into NHS pension.

I am married and husband has a similar salary, although our finances are reasonably separate. Sadly we do not have children and are having to accept that we probably never will.

My NHS pension is 14 years of a final salary and the remainder is the2015 scheme.

Basically my aim is to retire at 55-58 and wondered if I can start a private pension to start at this point?

My financial advisor said the concern was that I would hit my lifetime allowance very quickly.

Any thoughts? Should I just continue to invest in stocks to fund a potential early retirement?


Sunseed Fri 25-Aug-17 12:47:21

Your adviser is right about Lifetime Allowance being a concern in your case. Are you making full use of your annual ISA allowance for investing in stocks/shares? You don't get the tax relief on contributions, but on the other hand you won't get taxed on any money you draw out again which can be very helpful as a supplement to retirement income. And you get the same benefit as the pension wrapper in that capital growth within the ISA isn't taxed either.

dontcallmethatyoucunt Fri 25-Aug-17 20:54:08

you could also think about a Lifetime ISA - not much to choose from, but 'free' money. Have a read on moneysavingexpert for details.

JoJoSM2 Tue 19-Sep-17 09:10:17

Isn't lifetime allowance 1M? Presumably you're hundreds of thousand away yet? Also, you're planning to retire very early so won't be accumulating the pot for that long. Has he checked the numbers? I'd be tempted to put more towards your pension for the 40% tax efficiency. I do it more now as you might decide to go part time in your 50s perhaps. And get the lifetime ISA ASAP - must start before 40.

Sunseed Tue 19-Sep-17 11:28:45

JoJo - do you know what the test against Lifetime Allowance entails? Please don't make assumptions about how far or near to the limits the OP is if you don't actually know what you're talking about. You clearly aren't a qualified, regulated financial adviser and are in danger of a breach of the Financial Services and Markets Act 2000.

JoJoSM2 Tue 19-Sep-17 15:35:13

Sunseed shock Have you read your post back to yourself? It comes across rude. I am not an IFA and don't claim to be. However, I am almost the same age as the OP with a goal of retiring early. I also have a generous public sector pension but have been saving into a SIPP for about 3 years now with absolutely no risk of getting anywhere near my lifetime allowance.

Spinduffy, I would definitely ask to see the calculations that the IFA is basing their worries about you hitting your lifetime allowance on. I'll also double check it either myself or get another IFA to cross-check it.

The NHS is no doubt generous pension-wise, but presumably your earnings would have been considerably lower when you were in your 20's so the contributions/accruals are likely to have been significant only in the last few years. Currently, only a proportion of your total income comes from the NHS and pension contributions are based on that amount. I think there is a good chance you'll have considerable capacity in your lifetime allowance so I think having actual detailed calculations is important. Investing money through a SIPP or some other extra pension would be incredibly tax efficient in your situation so it's worth making the most of it.

dontcallmethatyoucunt Tue 19-Sep-17 21:24:53

The NHS is no doubt generous pension-wise, but presumably your earnings would have been considerably lower when you were in your 20's so the contributions/accruals are likely to have been significant only in the last few years

Nonsense, utter fucking nonsense. Did you not read the bit about 2015 changes?

Allocation can be an option on an NHS pension so LTA taxes can be mitigated.

ourkidmolly Tue 19-Sep-17 21:28:02

What about AVCs? Are they on offer?

BobTheGoldfish Tue 19-Sep-17 21:28:45

Presumably the OP has 14 years in the 1995 pension which is a final salary scheme so her income in her 20s is irrelevant.
Difficult to know exactly when you're likely to hit lifetime allowance as it will depend on CPI in the coming years amongst other unpredictable details, but definitely quite easy on that level of income to hit it in late 50s on the NHS scheme if you don't take early or take a larger lump sum (not a good idea for most).
As you probably won't be able to take the 1995 pension until age 60 and 2015 until age 68 without accurarial reduction, it might be best to put more in an ISA to bridge the gap.
Might be worth finding an IFA specialising in this area given the sums involved.

dontcallmethatyoucunt Tue 19-Sep-17 21:30:21

^^ meaning you can reduce the LTA calc, use your (possible) tax efficient pension savings to build flexibility and bridge the gap.

I'd look at this as a possible option. Proceed with caution though as LTA issues could certainly be possible.

BobTheGoldfish Tue 19-Sep-17 21:31:07

AVCs still risk taking her over the LTA though and she's likely to be a higher rate tax payer receiving the pension which needs to be taken into account.

dontcallmethatyoucunt Tue 19-Sep-17 21:31:49

AVC's are pension savings hmm

BobTheGoldfish Tue 19-Sep-17 21:33:52

Yes, hence them making it more likely she'll go over the LTA

dontcallmethatyoucunt Tue 19-Sep-17 21:41:00

grin that wasn't a question Bob it was a correction of someone else's suggestion ^^

I like to think I know a bit about pensions as a pensions specialist

BobTheGoldfish Tue 19-Sep-17 21:50:01

Sorry, misinterpreted
I think the OP would probably be best speaking direct to someone like you rather than random internet strangers grin

ourkidmolly Tue 19-Sep-17 23:33:17

Yes I know they are. I guess I meant rather than a private pension but as you say talk to a real person as this is tricky stuff.

dontcallmethatyoucunt Wed 20-Sep-17 14:18:55

My turn to say sorry then! I think it illustrates quite well how a load of stuff written on an internet page is pretty useless for this kind of thing.

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