@@dennisshea9540 The date you can draw is decided by the govt, that is true. But what do you mean by poor rate of return ? A pension should be the highest returning asset you own. If it’s not, then it’s not invested correctly.
Hi there James, I need some serious help with my final salary pension which I can start taking now or transfer out to maybe a flexible draw down pension. Kind regards, John Mitchell.
I hear what you’re saying however I’d much prefer to take my 25% and enjoy the money while I can.. life is far too short to be holding out for a later date and not being able to enjoy your money properly when your 60/65 when u could be a lot more frail and house bound does not seem appealing to me.
I've found you just at the right time! or possibly too late you might say..... I'm 58 and husband is soon to be 60 with pensions not available until we are 65 (penalty to take early)
Well I have other forms of income , but I will be taking my pension in February at 55 , I am already retired and intend enjoying my retirement to the full, my pension will be worth a lot when I am 75, but definitely not , waiting , going to enjoy my money why I am in good health , helping supporting my children 👍
A very valid comment was made about retiring when knowingly (or not) you have contributed enough to fund you alternative income from salary to pension. As Jame's implies this is a difficult decision to make as you switch from a salary to pension.
This has proven very useful, thank you. My problem is that I have a UK based private pension but no longer a tax resident, but obviously was when I took the pension out. Through various reason I will opt for the 25% Lump sum and considering draw down for the remainder over the next few years to go directly into my KiwiSaver here .
Hi, could you do an advice video for expats with a uk pension? There are hundreds of thousands of us who get bombarded with advice or sales pictches about transferring our pensions over.
Great video James. I wish I had seen it before I started my drawdown this year! But that said I retired at 55 basing my calculations on the 3% rule rather than the 4% much talked about by some, so I am still in a reasonably good position. It is just galling to know I missed out on all that extra tax free cash!
Example person turning 55 this month has 5 pensions in different amounts. The first one is the large one with a County Council around 28 years or there about. This one pension it seems has a step layer affect in terms of change to the pension with the County Council from Pension changes in 2008 and so on. The lump sum is guaranteed up till 2008 and after that the 25% kicks in from then with the portion taken from earnings from 2008 period. The 4 other pensions it seems are from different providers while changing jobs it seems. Now the advice I gave was along these lines keep the main pension as the large sum before 2008 figure and after that just take it annually. He got the pension 12 years before he would retire when 67 and the amount taken when 67 equals to 81 years of age before the it even out before from the age of 55 years. So in reality he would have the pension 12 years early even with a deduction. The other pension I suggested to take a 25% lump sum from the second largest leaving the rest. With this and combining the 3 other small pensions he created another pension pot but with benefits and up to 4,000 yearly as a top up. By the time he reached 67 years of age he would have a second pension as well as state pension. Whilst having an early access to county council pension. Reality with state pension and the one taken at 55 years and the second pension created and draw down when 67 would led to a very comfortable retirement. Some Advice explain the Pension changes from 1997 onwards would help. Upcoming change for people 2027 you have to be 57 before you can access your pension early if you wanted. Each pension pot you can take 25% tax free. The amount for investment if a pension is taken out is 4,000 per year if you wanted to start another pension after and so on.
Absolute quality content. I must admit that I too planned on using my lump sum to pay off my mortgage and put the extra in my ISA. I will definitely rethink my strategy!
Currently my wife and mine projections show we will have potentially 2-3 years of mortgage still to pay at £800 a month on retiring but will have £20K in state pension coming in, plus private pensions so its not an issue but will not be using large lump sums to clear the mortgage , that can be a buffer for us/travel fund with my son in USA and hopefully grandkids to be visiting as well.
My pension pot was raided by the company so after years of paying in it's worth diddly squat. With hindsight, unless you are in a public sector final salary scheme, I'd say invest your money in property. You keep control of the capital and the income stream.
Really sorry to hear this. I also work for a large company and this has bothered me a lot that they may appear to be able to raid the pension fund whenever they like. I remember Robert Maxwell doing this to daily mirror employee's
@James, I've came across your channel few weeks ago and I really like the mix of knowledge and my type of sense of humour in the mix. Well presented too! I've been thinking about transferring my old pension (below 10k) to my current one, with employer contribution in 3%+6% model. Is it a clever thing to do? Or would keeping these separate (the old pot is not being contributed to) is a better move? I appreciate your help!
@James please explain again… pensions & inheritance tax … I take it this applies on,y to drawdown pensions & not final salary pensions (these are lost at death, unless passed to spouse)
It depends the pension scheme and at what age they would allow to draw out. In NHS scheme, the old scheme would allow to draw at age of 60 whereas the new scheme would allow to draw at state pension age. So, I have drawn one scheme of pension at age of 60 and the other scheme drawn at age 66.
What are the pro's and con's of taking the 25% tax free lump sum from a DC scheme and does it make a difference between the considerations for a DB if you go down the SIP or Crystallised route?
How would your advice change if near/over the LTA. as taking the lump sum and investing that may be better than leaving it in pension fuelling more growth and tax liability. That would be a good video
😱 It’s a nightmare when you have no pension other than the state pension…..these are wise words you’ve given to everyone. I hope people take note ! Wonderful information 👍🏼
Question not covered. Assuming you were to retire at 55 with a £300k pot. If you had no other income between 55 and 65 (till other pensions start) wouldn't it make sense to at least withdraw my personal tax allowance of £12500 per year, and not draw anything tax free from the pension (of course that would reduce the tax free allowance i could get as the total left would only be £175k which woild then be left untouched unless needed). This assumes I don't actually need that 12500 for living during the 55-65 but we would re-invest it. Hope that makes sense
Hello James, new viewer here, I stumbled across your channel from a random refresh of the TH-cam homepage - enjoyed the video so much I've subscribed and clicked the bell icon for more! I'm so glad to have found you and really looking forward to watching your channel grow.
@@JamesShack I wonder whether you can share some knowledge on the pitfalls or benefits of accepting enhanced CETV’s as some pension funds look to de-risk. I recently declined an offer of +25% enhancement because I’m still under 55 and have a deferred DB pension which is guaranteed a minimum 3% or maximum 5% growth each April. Leaving it where it is with other death benefits included felt the right thing to do…for me.
Thanks for your videos. I Would be interested to hear your views on ethical investments and what to do if you think a stock market crash is around the corner (Shiller PE ratio is higher than in previous crashes).
Hi I have 6 pensions nothing major I’m 50 years of age and I really feel I probably won’t live until I’m 65 should I cash all in at 55 and enjoy the money
Get everything you say about the benefits of keeping money in pensions for inheritance etc but if you have already taken the tax free sum (for good reasons) and think you may want access to a large sum in the future then taking money out of your pension up to the 40% tax band and sticking it in ISAs is a better plan than the 40% or higher tax rate of a taxable lump sum withdrawal in the future.
Yes that may be the case, especially if you have years with no income tax and can just use your personal allowance. Of course you need to be very sure that this future expense will actually happen before you die!
Hi James wonderful video great insights Have you any positive testimony I am currently out of work I am 55 I have paid in to a defined pension for 24 years I can better my future and enrich my pension by becoming more wealthy can you talk about other pensions like ssas and Siipp Working till I'm 70 no thanks now the government has increased the age because we live longer I would like to renovate small commercial properties and build a small portfolio
56 no mortgage had a personal pension since I was 18 ,self employed and slowly reducing my workload I have savings and very low outgoings . Was a little confused about my pension but your clear concise information has made me decide just to leave it alone until if I absolutely need to .
Hi Gurt, I would not leave it alone as such, certainly make sure it’s been managed/invested correctly. The default funds that pensions put you into are often not suitable. But you can normally login to your pension portal and make changes.
Alot of us will get the state pension and like many are well entitled to it seeing as majority have paid taxes through working paying into the state pension tax system and not everyone ended up in extremely well paid jobs alot of us ended up low paid used and tossed aside when contracts dry up
Taking my pension at 55 was the best thing I’ve ever done. I went from having £280 a month to £1000 with £20,000 lump sum tax free. Iam a full time carer for my wife.
Preaching to the converted here, seeing as I work for a certain, government created body, which gives information to people about their DC pensions. Getting this job was the best thing I ever did.
I get the impression most people thinking of doing a flexible draw down are not aware of the limitations they are putting themselves into. Pension companies should do more to warn people.
James agree with everything you have said ..... however when the government looks round to where it can scoop up some extra revenue ... its going to look at the tax free lumps sum at some time. Then the calculations/strategy needs to change.
It will, for sure. But if we spent our time trying to guess what the govt may or may not do, we'll end up standing still and get nothing done. Play the game by the rules as they are.
Good video. When is the 25% that you can take out tax free calculated from? ( When I reach 55, or when I first start using it, or something else?) Also, has your advice changed about paying off a mortgage now that interest rates have risen?
Good video, thanks. One thing I don’t understand is the 20% government top up. This implies the government pays an additional 20% into your pension pot as well as any income tax relief you get. So in the example given, £80 becomes £100. I’ve looked at my pension pot which shows my salary sacrifice contributions (including my employer’s) but I can’t see any government contributions. Am I missing something?
They HMRC are not going to top up by 20% on your pension contribution thay you haven't paid any tax on. The top up only applies to additional pension contributions that have already been taxed.
I an only 33. I took out loads of my savings and put into my pension. I used to think ISA locked in fixed was ideal. Then I understood tax free benefit, paying less tax the other end when drawing out plus growth. 33 to 55 gives me 22 years for it to grow. I would rather invest now and be "broke" (accessible money) than be broke at 55. I've changed my lifestyle to account for this. If you've got savings at 33, put them in your pension and do cheaper holidays. You don't compare to others. They'll see when you retire at 55 and they're still working.
It also occurs to me that with this video being geared towards citizens of The UK, I. Eli Eve the term ‘State Pension’ that you use is the equivalent of Social Security in the US. Whereas here, my ‘State pension’ is what has been paid into over my years of employment into the New York State Pension Fund, and is a guaranteed fixed amount base on the Average Final Salary (AFS) which is a slightly complicated formula of the best 3 years out of a 5 year span with no year increasing more than 10% of the previous year. ( told you it was slightly complicated, & I’m not even sure that I got it right). I’m at the point basically where I would almost be working for free if I don’t retire. I would only be working for Overtime Pay. And after 33 years of killing myself doing that… I just can’t justify it anymore.
Another very informative video. Question.....can you transfer from one pension company or fund to another with better return and is there fees? And if so what are the best funds on the market at the moment?
Hi Trevor, yes you can transfer out easily, so long as it’s a defined contribution pension. Typically no or low fees. Which fund is the best is the million dollar question! But index fund based investments typically fair better than actively managed funds.
Tevor, when looking for lower cost with a company, dont just look at their charges. Look at what they offer in full. Some low cost, cut price firms may cause you lots of problems. Do your research well.
Lots of research needed I think. Or professional advice. Or a combination of the two. I've transferred two old pensions into one new SIPP. It was straightforward and no fees in my case, but it might be different for others. As for choosing what to invest in, I can't advise, but what I did was look at the past performance of all the index funds on offer, and used that as a starting point only. Ie, past performance alone should not be the deciding factor. I also looked at the shape of the graph over 10 years, just to see how consistent the growth is. Then lots and lots of googling. But be careful. Just because a lot of sources all point to the same fund, doesn't mean it's good advice. It could just be that one high profile individual said it and thousands of sheep repeated it, so always dig into the reasoning behind any advice, and check the logic behind it.
I think the biggest mistake people make with their pensions is not to have a pension at all and instead rely on the State pension! I'm constantly amazed how many people fall into this bracket.
It might be a bit off topic for this video, but you you explain how ETFs take the ongoing fees? And inpartucular how investment product transaction cost can be negtive?
Thank you. In just 10 minutes and 21 seconds you've clearly answered a number of questions I've been trying to figure out the answer to for quite some time. Lucky for me I'm not there yet, but it's always nice to know as much as possible before you need the knowledge, because in my experience, if you wait til you actually need to know, that's when costly mistakes happen.
The problem is that most people leave their contributions in a "lifestyle" option setup by their employer/provider. At 45 I was made redundant, no more contributions into that particular private pension, so I moved the funds into higher risk Tech focused funds. Without any further contributions that fund has grown 6 figures in 5 years, so do some homework, take plenty of advice and invest better.
@@StoodersFam be careful. Read the disclaimer that appears everywhere. Something like past performance isn't an indicator blah blah blah. I've seen my stocks and shares portfolio ho double digits positive, then double digits negative, then double digits positive again all within the space of a few weeks. We absolutely must not base our retirement plans on a few weeks worth of data.
I wouldn't bet against any future chancellor eating into that 25% allowance, especially if the post pandemic growth continues. Also the 55 age limit is going to rise.
Pension projections are horrifying and I feel I want to take control for myself. I was a contractor one point and I was paying into a personal pension. The projection suggested I would be better stuffing the money under my mattress it was that bad.
The projections are used by pension providers are extremely conservative. I would ignore these in the most part. If invested correctly you should see much better returns.
@@JamesShack Thanks James! I'm learning investing and looking to make a bit more than facing 20k a year for example in retirement. Failing that, an index fund using an ISA tax wrapper. I am also in the process of buying a bigger house so I can get some enjoyment out of my money and have that trade down contingency if I need it in retirement. I suppose I just want more control over my money and to get some enjoyment out of it too, rather than putting it into a pot. And lets face it, lightning can strike anyone down tomorrow. This may be a risky process but I think you need to stay happy to carry you forward. I still have some employer contributions going in and fingers crossed, some inheritance so the plan is not all risk. That said, the less someone needs to keep them moving forward, the richer they will be (as long as they are making money). No doubt. But at the extreme end these people die without spending most of it. What you need is a balance. Have a life but have a plan too. Do what carries you forward while having that plan in place, aiming at being happy, healthy and wealthy.
I have a question! I am let’s say I’m guessing slightly older than you. I bought a property 3 years ago. I invest money in the stock market, but I also need to pay off my mortgage. In truth I’m planning to contribute almost all my savings including the gains I’ve made toward my mortgage in 2 years time when I need to renew my mortgage. How do I know if this is the right strategy?
Unfortunately between government and advisers most of us don't stand a chance. Thankfully I ditched my 25 year endowment mortgage in the 90s. My mis selling claim was rejected remember this before Internet so you relied on 1 person pretty much. Then I kept my Midland Bank personal pension where the forecast is normally pretty close to my actual investment despite years of compounding and best 25 years performance in history? Never mind buying some super speculative crypto currency made those problems go away. Joking apart knowing how these things work and getting advice is always helpful. Not to mention my top tip - spend less. Retirement used to be financially viable when we spent less in retirement now clever marketing has targeted the purse of everyone in retirement.
Advice request - I wish to remain in the house I have lived in for 20+years. My husband wants half. I am 62. Considering withdrawing 25% of pension pot and 100% of some of my policies VERSES taking out a small mortgage which would take approx 14 years, causing me having to work past retirement. Which is the best course of action? Can anyone on this forum suggest?
Hi James, you mentioned that if you died over 75years of age there is no IHT but the beneficiary would need to pay tax on the lump sum at their marginal rate "...just as you would have been." what if there were still funds that for me would have been part of my 25% tax free portion? Is that taxable for a beneficiary if I die over 75?
My late father was an accounts manager. When I showed him my pensions' projection when I took voluntary redundancy at 55, he said don't touch it until my 60th birthday. That way, I would receive the full amount. When I contacted HMRC to enquire if I could access my pension a month before my 60th, I was informed that there would be a substantial decrease in the monthly payments. I waited until I reached my 60th. My father was right, as usual.
I saved into a Merchant Navy Officers Pension.I never knew how poor it was.Apon retirement I had to drastically reduce my standard of living,although I received annual reports on how much I and my employer had paid in.The big mistake I made was believing their projections.
I still massively prefer ISA's if you are young, I think the biggest downside is the age you can access it and as the Government plan to link this up to 10 years behind state pension age it will simply be too long before I can enjoy the benefits. Pensions get better the older you are or later you start but if you can get an ISA going young in your 20s you can use it how you like, whenever you see fit, I was unaware of the IHT benefits however there are ways to move your wealth to dodge this, for example trust funds etc.. I still pay into my pension but I see it purely as bonus and do not intend to rely on it, my main pot and net worth is in my ISA and will hopefully be looking at BTL through ltd soon, biggest point is to invest in something over the long term whatever that is.
@@alanwilliams4833 I think it works out roughly the same, ISA you have already paid tax on the money have put in there but when you pull it out you pay nothing, which is amazing when looking at compound interest. With a pension you dont pay tax until you pull it out and your employer usually adds up to 100% of contribution you have put in but when you come to pull it out you will pay tax on it. If you decide to pull it all out in one go your likely going to be paying 40-45% tax on it which even when considering the 25% tax free lump sum works out to roughly the same amount as if you had put money into your ISA, there are calculators out there which you can do this with. The biggest differences are how quickly you can access it and when you actually start investing for your pension. If you start investing £250 in an ISA at 18 into say SP500 and average 10% you will end up with approximately 1.5 million when you are 58 (at the moment earliest i can access my private pension), i can pull the full amount out tax feee if I wanted. If you put the same 250 into a pension and your employer puts in 250 you end up with around 3.2 million @10% return, if you pull that at 58 you will be paying 45% tax on it except hang on there are additional taxes if you have over £1million in your pension you will pay 55% on anything above it, so even after your tax free lump sum your final balance will work out roughly the same as if you had put it into an ISA. Pensions work better if you start later and are on high tax rate of 40% because you don't need to access until your at retirement age and you will need to contribute more plus the tax benefits make a lot of sense. The sound advice however is invest in your pension up to the employer match, then ensure you are putting as much free income into a stocks ISA, for me it works out at 6.5% to my pension and approx 40% of my income into ISA.. The main advantage of an ISA i think is if you start young you can decide to retire early, say at 50 or 45 whilst with a pension you are locked into 10 year behind the state pension age.
badly advised by pension company i asked for 25 % to be told only 25 % of the 25 % was tax free so ended up paying an extra £1000 in tax so i will you watching your videos before i make the same mistakes
Hit 55 this year and have two pensions, One a salary end from 25 years service "advice is defer as long as possible" and the other a Work Place Pension started 2012 with current employer with a 5% salary sacrifice so not going to be huge by the time I retire. So I took the tax free lump sum from the WPP and paid off my mortgage as had been over paying the last few years and wanted it gone. The remainder went into a personal pension and will grow off interest as not topping up at present. My WPP starts from fresh and as no longer paying a mortgage I have up my salary sacrifice to 10% so getting the government top up to boost it.
Hi James, great video! I’m 53, single and have 2 pensions, 1 private and 1 workplace. I guess the question I would ask is: what factors should I consider when wanting to increase my monthly payments? Should I pay more into my workplace pension because my employer is also contributing - or pay more into my personal plan? Neither are currently very large funds, which makes this decision more difficult for me! I don’t want to do the wrong thing. My pension advisor is lovely but I’m not sure he’s neutral! Thanks for any advice, Jo 👍😀
Always pay into the company scheme to make your employer maximise their contributions, once you have done this then it's a case of looking at the best place for any extra contributions you want to make.
Disagree with #3. If you withdraw funds from your ISA it is completely exempt from tax. Whereas receiving money from your pension is subject to income tax. The point around inheritance is fairly irrelevant; people don't contribute to pension plans to leave them as inheritance to their children. They are a vehicle to provide them with regular income in later life. If a person is keen on leaving assets/money to their children they should seek out other means to do so
I should also add, that often the advice that pension > ISA is often used by "financial advisors" who are receiving commission from pension providers. Often the pension providers will want people to invest their pension in their authorised funds so that the maximum fee can be obtained for them. Stocks & shares ISAs don't offer that and will lead to less fees being paid and higher returns being earned on the pot. I would also like to add that the funds recommended by pension providers are often over-diversified & charge high fees leading to significant under performance
Actually some people do pay into their pensions (or rather their employer or company does) and expect their pensions to be a tax beneficial vehicle to pass to their children.
Hi James, what are your thoughts on equity release on property? Is it worth factoring into plans or better to keep it as a contingency option in worst case scenarios? What are the drawbacks to using it?
Perviously equity release products have been extremely expensive relative to a normal mortgage. Recently, several new products have come to the market that are much more competitive but then again interest rates have risen which puts many people off. Either way, equity release can be very effective in the right situations.
Extremely well explained video James. It's amazing the number of people who I have to talk down from the ledge of taking full TFC when they stop working, just to put into the bank. Just so it's there.
It's always presented as taking all your tax free amount in one hit, where in flexible draw down surely you can take the tax free amount in stages? so you can add to your state pension say, without paying tax on the money. Also as the state pension is below the personal tax allowance then part of your money from a DB / DC scheme can be tax free as you use the balance of your allowance.
guy Rawson you can definitely do that if your contract allows flexi access drawdown. A lot of low cost employer schemes won’t & they will present your options as an all or nothing.
Hi James, I agree that inflation erodes the value of your debt, but if your income does not increase in line with the inflation then have you really gained?
so my dad had terminal cancer just before retiring SO his pension was passed to my mother who passed away 2 yrs later and the whole POT between them the government had so i have 15 months before i hit 55 and then im taking all my 8 private pensions which will be sorted/moved to one big pot then semi retiring till my state pension its as simple as that :D
Hi Paul, sorry to hear that. So you inherited their pensions as a tax free lump sum (died before 75)? Consolidate pensions sure just don’t take it out of the pensions at once!
Hi James, I've done exactly as you have stated & in this volatile World. Have got absolutely, no regrets! ISAS, in my opinion are a waste of time, because of market & funding constraints. Historically, Pensions are the best investments, long term. The tax breaks are the best!
Hi James. Just met your channel, liked the things you’re saying and subbed 👍 The tax on the tax on the tax is the biggest rip off/scandal/robbery/despicable/ atrocious thing I’ve realised. So you either die poor or you accept the fact that the good ol’ government whoever they may be, are gunna give us a good shafting when we get old with the money we’ve saved all our lives 🤔…hmmmm nice! James do you suggest we see an independent financial adviser with all this kinda stuff as I’m assuming every case is different? Thanks
I have no issue using 25% tax free to be mortgage free at 55 and work 3 days per week Monday to Wednesday till I'm 67 In the meantime I'm gunna ram as must as I can into my work place NEST pension
@James Shack a silly question for you. How would approaching the lifetime allowance of £1,073,100 before the age of 55 affect the strategy of contributing to a DC pension? Would you stop contributing to it? And then once you have reached the age of 55 and have retired, what is the most tax efficient way of dealing with your pensions if it is over the LTA?
@@JamesShack ah so it wasn't a too silly of a question (I hope) then! Thank you for responding as always and I will be eagerly waiting for the next video to come out!
Taking money out of your pension is a big mistake....The money is gone in a few years .. But if you leave it in your pension you will be getting that extra money every month long after the guy who took the lumps sum out ! which he has spent and forgotten about ..but you get that extra pension for life ..
Great video as always but I think you have assumed people use more than the 25% lump sum to buy another property, payoff your mortgage or top up an ISA. Is your guidance any difference of you are doing any of these from JUST your 25%?
Hi James. This is a great channel and your presentation is great! You mentioned that a good time to invest further in to a pension is 55 and over. Can you explain that please? Many thanks!
Because the only downside to a pension is that you can’t access it until 55. But if you can access it immediately, if you need you, the tax benefits are epic.
In the real world you often get shafted by your pension company. Like Equitable Life Daily Mirror pension group. Transferred my depleted pension into a money fund expecting a modest 6% 10 years ago, after 5 years " locked in" I was 5k worse off. Feck pensions.
![HIWWHEE | OHM [Official MV]](http://i.ytimg.com/vi/OJJLtTLqLag/mqdefault.jpg)
Pensions are one of the most misunderstood products. What do you think of them, good? Bad? Is there something you think is better?
Terrible. Poor rate of return and enslavement until the day they let you retire.
@@dennisshea9540 The date you can draw is decided by the govt, that is true. But what do you mean by poor rate of return ? A pension should be the highest returning asset you own. If it’s not, then it’s not invested correctly.
@@JamesShack Pension is controlled by the union or pension leads. Historically poor investments. Ask Teachers Funds or States
Hi there James,
I need some serious help with my final salary pension which I can start taking now or transfer out to maybe a flexible draw down pension.
Kind regards,
John Mitchell.
@@dennisshea9540 Here we’re talking about private defined contributions pensions which are almost as flexible as an ISA.
So glad I watched this ! You just probably saved my Family a huge chunk of money. Thank You
I am 54, so you timed it perfectly !
Bless You
I hear what you’re saying however I’d much prefer to take my 25% and enjoy the money while I can.. life is far too short to be holding out for a later date and not being able to enjoy your money properly when your 60/65 when u could be a lot more frail and house bound does not seem appealing to me.
Detach your income from your happiness
I agree with you buddy not very gets to good health at 80 you might be house bound at 72 and what’s the point of having more money then
No point saving in the first place then, cos a lot of people die in their 20s and 30s.
@@bigboldbicycle that’s a very silly comment. Statistically irrelevant compared to old age.
excellent summary again James. I have stopped working and reach 55 next year, so am carefully weighing up the right options
Thanks For making the confusing world of pensions much clearer.
Nice if you updated this so it reflects 2023 pension changes
Thank you James a very clear concise video. have you done or please can you do a video to show any potential pit falls of the NHS pensions?
I've found you just at the right time! or possibly too late you might say..... I'm 58 and husband is soon to be 60 with pensions not available until we are 65 (penalty to take early)
You cannot pay much into a pension after your start drawing down, HOWEVER you can still put money into a maxi-Isa - this is the best approach.
I'm 55 next month so timely advice, thanks
Well I have other forms of income , but I will be taking my pension in February at 55 , I am already retired and intend enjoying my retirement to the full, my pension will be worth a lot when I am 75, but definitely not , waiting , going to enjoy my money why I am in good health , helping supporting my children 👍
A very valid comment was made about retiring when knowingly (or not) you have contributed enough to fund you alternative income from salary to pension. As Jame's implies this is a difficult decision to make as you switch from a salary to pension.
It’s very difficult. It’s a battle of logic and fear!
Absolutely brilliant video, James! I'm passing this onto my soon-to-be approaching retirement aged parents now. Thank you!
You are always better using a financial advisor. I’ve just retired and the advice and money I saved more than covered his fees.
Fortunately you have an adviser that really cares. Many do not.
Quote of the century, "HMRC are neither generous or stupid" - Brilliant !!!
@George Johnson drawing down gradually over several years, say your personal allowance only each year can be very tax efficient.
And they lie.
This has proven very useful, thank you. My problem is that I have a UK based private pension but no longer a tax resident, but obviously was when I took the pension out. Through various reason I will opt for the 25% Lump sum and considering draw down for the remainder over the next few years to go directly into my KiwiSaver here .
Hi, could you do an advice video for expats with a uk pension? There are hundreds of thousands of us who get bombarded with advice or sales pictches about transferring our pensions over.
Great video James. I wish I had seen it before I started my drawdown this year! But that said I retired at 55 basing my calculations on the 3% rule rather than the 4% much talked about by some, so I am still in a reasonably good position. It is just galling to know I missed out on all that extra tax free cash!
Example person turning 55 this month has 5 pensions in different amounts. The first one is the large one with a County Council around 28 years or there about. This one pension it seems has a step layer affect in terms of change to the pension with the County Council from Pension changes in 2008 and so on. The lump sum is guaranteed up till 2008 and after that the 25% kicks in from then with the portion taken from earnings from 2008 period. The 4 other pensions it seems are from different providers while changing jobs it seems. Now the advice I gave was along these lines keep the main pension as the large sum before 2008 figure and after that just take it annually. He got the pension 12 years before he would retire when 67 and the amount taken when 67 equals to 81 years of age before the it even out before from the age of 55 years. So in reality he would have the pension 12 years early even with a deduction.
The other pension I suggested to take a 25% lump sum from the second largest leaving the rest. With this and combining the 3 other small pensions he created another pension pot but with benefits and up to 4,000 yearly as a top up. By the time he reached 67 years of age he would have a second pension as well as state pension. Whilst having an early access to county council pension. Reality with state pension and the one taken at 55 years and the second pension created and draw down when 67 would led to a very comfortable retirement.
Some Advice explain the Pension changes from 1997 onwards would help. Upcoming change for people 2027 you have to be 57 before you can access your pension early if you wanted. Each pension pot you can take 25% tax free. The amount for investment if a pension is taken out is 4,000 per year if you wanted to start another pension after and so on.
Absolute quality content. I must admit that I too planned on using my lump sum to pay off my mortgage and put the extra in my ISA. I will definitely rethink my strategy!
Currently my wife and mine projections show we will have potentially 2-3 years of mortgage still to pay at £800 a month on retiring but will have £20K in state pension coming in, plus private pensions so its not an issue but will not be using large lump sums to clear the mortgage , that can be a buffer for us/travel fund with my son in USA and hopefully grandkids to be visiting as well.
My pension pot was raided by the company so after years of paying in it's worth diddly squat. With hindsight, unless you are in a public sector final salary scheme, I'd say invest your money in property. You keep control of the capital and the income stream.
Really sorry to hear this. I also work for a large company and this has bothered me a lot that they may appear to be able to raid the pension fund whenever they like. I remember Robert Maxwell doing this to daily mirror employee's
@James, I've came across your channel few weeks ago and I really like the mix of knowledge and my type of sense of humour in the mix. Well presented too! I've been thinking about transferring my old pension (below 10k) to my current one, with employer contribution in 3%+6% model. Is it a clever thing to do? Or would keeping these separate (the old pot is not being contributed to) is a better move? I appreciate your help!
It should be easy to transfer with nil cost and it keeps your pensions tidy and manageable
@James please explain again… pensions & inheritance tax … I take it this applies on,y to drawdown pensions & not final salary pensions (these are lost at death, unless passed to spouse)
It depends the pension scheme and at what age they would allow to draw out. In NHS scheme, the old scheme would allow to draw at age of 60 whereas the new scheme would allow to draw at state pension age. So, I have drawn one scheme of pension at age of 60 and the other scheme drawn at age 66.
What are the pro's and con's of taking the 25% tax free lump sum from a DC scheme and does it make a difference between the considerations for a DB if you go down the SIP or Crystallised route?
Really pleased this has confirmed my understanding 👍
First like 👍 Nice to see you are using the timeline bar again.
I did not know the third point - thank you.
Wonder what your thoughts are on buying annuities with a pension pot?
Great examples and so simply explained.
How would your advice change if near/over the LTA. as taking the lump sum and investing that may be better than leaving it in pension fuelling more growth and tax liability. That would be a good video
😱 It’s a nightmare when you have no pension other than the state pension…..these are wise words you’ve given to everyone. I hope people take note ! Wonderful information 👍🏼
Thanks for the clarity between Pensions and ISA's
Really good video. Thank you 😊
James brilliant - thank you! :)
Question not covered. Assuming you were to retire at 55 with a £300k pot. If you had no other income between 55 and 65 (till other pensions start) wouldn't it make sense to at least withdraw my personal tax allowance of £12500 per year, and not draw anything tax free from the pension (of course that would reduce the tax free allowance i could get as the total left would only be £175k which woild then be left untouched unless needed). This assumes I don't actually need that 12500 for living during the 55-65 but we would re-invest it. Hope that makes sense
Hello James, new viewer here, I stumbled across your channel from a random refresh of the TH-cam homepage - enjoyed the video so much I've subscribed and clicked the bell icon for more! I'm so glad to have found you and really looking forward to watching your channel grow.
There for the sub and welcome!
@@JamesShack I wonder whether you can share some knowledge on the pitfalls or benefits of accepting enhanced CETV’s as some pension funds look to de-risk. I recently declined an offer of +25% enhancement because I’m still under 55 and have a deferred DB pension which is guaranteed a minimum 3% or maximum 5% growth each April. Leaving it where it is with other death benefits included felt the right thing to do…for me.
Thanks for your videos. I Would be interested to hear your views on ethical investments and what to do if you think a stock market crash is around the corner (Shiller PE ratio is higher than in previous crashes).
th-cam.com/video/YRG09ou9q1E/w-d-xo.html
th-cam.com/video/JHGQPZ0pG5U/w-d-xo.html
Good one James. Just backing away from my pension drawdown.
Hi I have 6 pensions nothing major I’m 50 years of age and I really feel I probably won’t live until I’m 65 should I cash all in at 55 and enjoy the money
Get everything you say about the benefits of keeping money in pensions for inheritance etc but if you have already taken the tax free sum (for good reasons) and think you may want access to a large sum in the future then taking money out of your pension up to the 40% tax band and sticking it in ISAs is a better plan than the 40% or higher tax rate of a taxable lump sum withdrawal in the future.
Yes that may be the case, especially if you have years with no income tax and can just use your personal allowance. Of course you need to be very sure that this future expense will actually happen before you die!
Otherwise you’ll pay 40% tax anyway (but IHT)!
learned lots from this thanks
Hi James wonderful video great insights
Have you any positive testimony I am currently out of work I am 55 I have paid in to a defined pension for 24 years
I can better my future and enrich my pension by becoming more wealthy can you talk about other pensions like ssas and Siipp
Working till I'm 70 no thanks now the government has increased the age because we live longer I would like to renovate small commercial properties and build a small portfolio
Great information.
Have subscribed
56 no mortgage had a personal pension since I was 18 ,self employed and slowly reducing my workload I have savings and very low outgoings .
Was a little confused about my pension but your clear concise information has made me decide just to leave it alone until if I absolutely need to .
Hi Gurt, I would not leave it alone as such, certainly make sure it’s been managed/invested correctly. The default funds that pensions put you into are often not suitable. But you can normally login to your pension portal and make changes.
@@JamesShack thankyou I’ll definitely look into that
Alot of us will get the state pension and like many are well entitled to it seeing as majority have paid taxes through working paying into the state pension tax system and not everyone ended up in extremely well paid jobs alot of us ended up low paid used and tossed aside when contracts dry up
Taking my pension at 55 was the best thing I’ve ever done. I went from having £280 a month to £1000 with £20,000 lump sum tax free. Iam a full time carer for my wife.
Preaching to the converted here, seeing as I work for a certain, government created body, which gives information to people about their DC pensions. Getting this job was the best thing I ever did.
I get the impression most people thinking of doing a flexible draw down are not aware of the limitations they are putting themselves into. Pension companies should do more to warn people.
James agree with everything you have said ..... however when the government looks round to where it can scoop up some extra revenue ... its going to look at the tax free lumps sum at some time. Then the calculations/strategy needs to change.
It will, for sure. But if we spent our time trying to guess what the govt may or may not do, we'll end up standing still and get nothing done. Play the game by the rules as they are.
Excellent video
I had a £115k pension but took it at 53 due to illness. All they gave me is £14k lump and £200 a month. Can I apply for more at 55
@James Shack once I’ve maxed out my work pension, what’s better for retirement - LISA of SIPP?
Good video. When is the 25% that you can take out tax free calculated from? ( When I reach 55, or when I first start using it, or something else?)
Also, has your advice changed about paying off a mortgage now that interest rates have risen?
Good video, thanks. One thing I don’t understand is the 20% government top up. This implies the government pays an additional 20% into your pension pot as well as any income tax relief you get. So in the example given, £80 becomes £100. I’ve looked at my pension pot which shows my salary sacrifice contributions (including my employer’s) but I can’t see any government contributions. Am I missing something?
They HMRC are not going to top up by 20% on your pension contribution thay you haven't paid any tax on. The top up only applies to additional pension contributions that have already been taxed.
Salary sacrifice does not work in that way. It’s only money you have already paid tax on.
@@JamesShack ok thanks that makes sense.
One thing that catches people out is that 20% tax taken off £100 =£20
But
£20 added back to £80 = 25%
This video is so informative! Thanks!!! 😃
I an only 33. I took out loads of my savings and put into my pension. I used to think ISA locked in fixed was ideal. Then I understood tax free benefit, paying less tax the other end when drawing out plus growth. 33 to 55 gives me 22 years for it to grow. I would rather invest now and be "broke" (accessible money) than be broke at 55. I've changed my lifestyle to account for this. If you've got savings at 33, put them in your pension and do cheaper holidays. You don't compare to others. They'll see when you retire at 55 and they're still working.
Hi James, another fantastic video. Really helpful. 😊
LTA and other taxation considerations are missing from this argument and could lead to different mistakes
It also occurs to me that with this video being geared towards citizens of The UK, I. Eli Eve the term ‘State Pension’ that you use is the equivalent of Social Security in the US. Whereas here, my ‘State pension’ is what has been paid into over my years of employment into the New York State Pension Fund, and is a guaranteed fixed amount base on the Average Final Salary (AFS) which is a slightly complicated formula of the best 3 years out of a 5 year span with no year increasing more than 10% of the previous year. ( told you it was slightly complicated, & I’m not even sure that I got it right).
I’m at the point basically where I would almost be working for free if I don’t retire. I would only be working for Overtime Pay. And after 33 years of killing myself doing that… I just can’t justify it anymore.
Another very informative video. Question.....can you transfer from one pension company or fund to another with better return and is there fees? And if so what are the best funds on the market at the moment?
Hi Trevor, yes you can transfer out easily, so long as it’s a defined contribution pension. Typically no or low fees. Which fund is the best is the million dollar question! But index fund based investments typically fair better than actively managed funds.
Tevor, when looking for lower cost with a company, dont just look at their charges. Look at what they offer in full. Some low cost, cut price firms may cause you lots of problems. Do your research well.
Lots of research needed I think. Or professional advice. Or a combination of the two. I've transferred two old pensions into one new SIPP. It was straightforward and no fees in my case, but it might be different for others. As for choosing what to invest in, I can't advise, but what I did was look at the past performance of all the index funds on offer, and used that as a starting point only. Ie, past performance alone should not be the deciding factor. I also looked at the shape of the graph over 10 years, just to see how consistent the growth is. Then lots and lots of googling. But be careful. Just because a lot of sources all point to the same fund, doesn't mean it's good advice. It could just be that one high profile individual said it and thousands of sheep repeated it, so always dig into the reasoning behind any advice, and check the logic behind it.
Hi James. Very interesting video. Could you make a similar video for Defined Benefit pensions? Thanks!
I think the biggest mistake people make with their pensions is not to have a pension at all and instead rely on the State pension! I'm constantly amazed how many people fall into this bracket.
Thank you for this video. I'm trying to help my Mum who is close to retirement and this has been eye-opening. Thank you so much
Hey Chris, I’m glad it helped and we’ll do d for helping her out!
Excellent advice
It might be a bit off topic for this video, but you you explain how ETFs take the ongoing fees? And inpartucular how investment product transaction cost can be negtive?
Thank you. In just 10 minutes and 21 seconds you've clearly answered a number of questions I've been trying to figure out the answer to for quite some time. Lucky for me I'm not there yet, but it's always nice to know as much as possible before you need the knowledge, because in my experience, if you wait til you actually need to know, that's when costly mistakes happen.
Yes indeed! You can’t plan ahead of you don’t know what the options are in the future !
Agreed, really excellent video! Glad it came up in my recommendations 😃
The problem is that most people leave their contributions in a "lifestyle" option setup by their employer/provider. At 45 I was made redundant, no more contributions into that particular private pension, so I moved the funds into higher risk Tech focused funds. Without any further contributions that fund has grown 6 figures in 5 years, so do some homework, take plenty of advice and invest better.
@@StoodersFam be careful. Read the disclaimer that appears everywhere. Something like past performance isn't an indicator blah blah blah.
I've seen my stocks and shares portfolio ho double digits positive, then double digits negative, then double digits positive again all within the space of a few weeks. We absolutely must not base our retirement plans on a few weeks worth of data.
I wouldn't bet against any future chancellor eating into that 25% allowance, especially if the post pandemic growth continues. Also the 55 age limit is going to rise.
Pension projections are horrifying and I feel I want to take control for myself.
I was a contractor one point and I was paying into a personal pension. The projection suggested I would be better stuffing the money under my mattress it was that bad.
The projections are used by pension providers are extremely conservative. I would ignore these in the most part. If invested correctly you should see much better returns.
@@JamesShack Thanks James! I'm learning investing and looking to make a bit more than facing 20k a year for example in retirement. Failing that, an index fund using an ISA tax wrapper. I am also in the process of buying a bigger house so I can get some enjoyment out of my money and have that trade down contingency if I need it in retirement. I suppose I just want more control over my money and to get some enjoyment out of it too, rather than putting it into a pot. And lets face it, lightning can strike anyone down tomorrow. This may be a risky process but I think you need to stay happy to carry you forward. I still have some employer contributions going in and fingers crossed, some inheritance so the plan is not all risk. That said, the less someone needs to keep them moving forward, the richer they will be (as long as they are making money). No doubt. But at the extreme end these people die without spending most of it. What you need is a balance. Have a life but have a plan too. Do what carries you forward while having that plan in place, aiming at being happy, healthy and wealthy.
I have a question! I am let’s say I’m guessing slightly older than you. I bought a property 3 years ago. I invest money in the stock market, but I also need to pay off my mortgage. In truth I’m planning to contribute almost all my savings including the gains I’ve made toward my mortgage in 2 years time when I need to renew my mortgage. How do I know if this is the right strategy?
Unfortunately between government and advisers most of us don't stand a chance. Thankfully I ditched my 25 year endowment mortgage in the 90s. My mis selling claim was rejected remember this before Internet so you relied on 1 person pretty much. Then I kept my Midland Bank personal pension where the forecast is normally pretty close to my actual investment despite years of compounding and best 25 years performance in history? Never mind buying some super speculative crypto currency made those problems go away. Joking apart knowing how these things work and getting advice is always helpful. Not to mention my top tip - spend less. Retirement used to be financially viable when we spent less in retirement now clever marketing has targeted the purse of everyone in retirement.
Nice video. Clearly explained. Thank you. Have just hit the subscribe button.
Advice request - I wish to remain in the house I have lived in for 20+years. My husband wants half. I am 62. Considering withdrawing 25% of pension pot and 100% of some of my policies VERSES taking out a small mortgage which would take approx 14 years, causing me having to work past retirement. Which is the best course of action? Can anyone on this forum suggest?
Hi James, you mentioned that if you died over 75years of age there is no IHT but the beneficiary would need to pay tax on the lump sum at their marginal rate "...just as you would have been." what if there were still funds that for me would have been part of my 25% tax free portion? Is that taxable for a beneficiary if I die over 75?
My late father was an accounts manager. When I showed him my pensions' projection when I took voluntary redundancy at 55, he said don't touch it until my 60th birthday.
That way, I would receive the full amount. When I contacted HMRC to enquire if I could access my pension a month before my 60th, I was informed that there would be
a substantial decrease in the monthly payments. I waited until I reached my 60th. My father was right, as usual.
I saved into a Merchant Navy Officers Pension.I never knew how poor it was.Apon retirement I had to drastically reduce my standard of living,although I received annual reports on how much I and my employer had paid in.The big mistake I made was believing their projections.
I still massively prefer ISA's if you are young, I think the biggest downside is the age you can access it and as the Government plan to link this up to 10 years behind state pension age it will simply be too long before I can enjoy the benefits. Pensions get better the older you are or later you start but if you can get an ISA going young in your 20s you can use it how you like, whenever you see fit, I was unaware of the IHT benefits however there are ways to move your wealth to dodge this, for example trust funds etc.. I still pay into my pension but I see it purely as bonus and do not intend to rely on it, my main pot and net worth is in my ISA and will hopefully be looking at BTL through ltd soon, biggest point is to invest in something over the long term whatever that is.
If your employer also pays into your pension… you may be missing out just doing ISA
@@alanwilliams4833 I think it works out roughly the same, ISA you have already paid tax on the money have put in there but when you pull it out you pay nothing, which is amazing when looking at compound interest. With a pension you dont pay tax until you pull it out and your employer usually adds up to 100% of contribution you have put in but when you come to pull it out you will pay tax on it. If you decide to pull it all out in one go your likely going to be paying 40-45% tax on it which even when considering the 25% tax free lump sum works out to roughly the same amount as if you had put money into your ISA, there are calculators out there which you can do this with. The biggest differences are how quickly you can access it and when you actually start investing for your pension. If you start investing £250 in an ISA at 18 into say SP500 and average 10% you will end up with approximately 1.5 million when you are 58 (at the moment earliest i can access my private pension), i can pull the full amount out tax feee if I wanted. If you put the same 250 into a pension and your employer puts in 250 you end up with around 3.2 million @10% return, if you pull that at 58 you will be paying 45% tax on it except hang on there are additional taxes if you have over £1million in your pension you will pay 55% on anything above it, so even after your tax free lump sum your final balance will work out roughly the same as if you had put it into an ISA. Pensions work better if you start later and are on high tax rate of 40% because you don't need to access until your at retirement age and you will need to contribute more plus the tax benefits make a lot of sense. The sound advice however is invest in your pension up to the employer match, then ensure you are putting as much free income into a stocks ISA, for me it works out at 6.5% to my pension and approx 40% of my income into ISA.. The main advantage of an ISA i think is if you start young you can decide to retire early, say at 50 or 45 whilst with a pension you are locked into 10 year behind the state pension age.
badly advised by pension company i asked for 25 % to be told only 25 % of the 25 % was tax free so ended up paying an extra £1000 in tax so i will you watching your videos before i make the same mistakes
Hit 55 this year and have two pensions, One a salary end from 25 years service "advice is defer as long as possible" and the other a Work Place Pension started 2012 with current employer with a 5% salary sacrifice so not going to be huge by the time I retire.
So I took the tax free lump sum from the WPP and paid off my mortgage as had been over paying the last few years and wanted it gone.
The remainder went into a personal pension and will grow off interest as not topping up at present.
My WPP starts from fresh and as no longer paying a mortgage I have up my salary sacrifice to 10% so getting the government top up to boost it.
Hi James, great video! I’m 53, single and have 2 pensions, 1 private and 1 workplace. I guess the question I would ask is: what factors should I consider when wanting to increase my monthly payments? Should I pay more into my workplace pension because my employer is also contributing - or pay more into my personal plan? Neither are currently very large funds, which makes this decision more difficult for me! I don’t want to do the wrong thing. My pension advisor is lovely but I’m not sure he’s neutral! Thanks for any advice, Jo 👍😀
Always pay into the company scheme to make your employer maximise their contributions, once you have done this then it's a case of looking at the best place for any extra contributions you want to make.
Have a look at the charges the different pension provider makes, over 20 to 30 years they really add up
Disagree with #3. If you withdraw funds from your ISA it is completely exempt from tax. Whereas receiving money from your pension is subject to income tax. The point around inheritance is fairly irrelevant; people don't contribute to pension plans to leave them as inheritance to their children. They are a vehicle to provide them with regular income in later life. If a person is keen on leaving assets/money to their children they should seek out other means to do so
I should also add, that often the advice that pension > ISA is often used by "financial advisors" who are receiving commission from pension providers. Often the pension providers will want people to invest their pension in their authorised funds so that the maximum fee can be obtained for them. Stocks & shares ISAs don't offer that and will lead to less fees being paid and higher returns being earned on the pot. I would also like to add that the funds recommended by pension providers are often over-diversified & charge high fees leading to significant under performance
I think Pete explains this nicely: th-cam.com/video/y-4s1wqwQ7k/w-d-xo.html
Actually some people do pay into their pensions (or rather their employer or company does) and expect their pensions to be a tax beneficial vehicle to pass to their children.
Hi James, what are your thoughts on equity release on property? Is it worth factoring into plans or better to keep it as a contingency option in worst case scenarios? What are the drawbacks to using it?
Perviously equity release products have been extremely expensive relative to a normal mortgage.
Recently, several new products have come to the market that are much more competitive but then again interest rates have risen which puts many people off.
Either way, equity release can be very effective in the right situations.
your video shows pay 'of' mortgage not pay 'off'🤦, at 6.40
Extremely well explained video James.
It's amazing the number of people who I have to talk down from the ledge of taking full TFC when they stop working, just to put into the bank. Just so it's there.
Indeed! It’s exactly like cashing in your S&S ISA to put it in the bank!
It's always presented as taking all your tax free amount in one hit, where in flexible draw down surely you can take the tax free amount in stages? so you can add to your state pension say, without paying tax on the money. Also as the state pension is below the personal tax allowance then part of your money from a DB / DC scheme can be tax free as you use the balance of your allowance.
guy Rawson you can definitely do that if your contract allows flexi access drawdown. A lot of low cost employer schemes won’t & they will present your options as an all or nothing.
@@official_Grant thanks Grant, at that point then option to move funds into a provider who will alllow flexible drawdown
How can I access personalised advice like this from yourself
Hi James, I agree that inflation erodes the value of your debt, but if your income does not increase in line with the inflation then have you really gained?
Of or Off ?
Heard if it goes higher, some family’s both accounts would go pop. But no one knows which way it is going to go. Could not care less.
You have access to your pension before 65 I retired at 62 and I’m just a normal tradesman
Getting married is surely the biggest financial mistake of your life......as I found out when the divorce papers arrived!
so my dad had terminal cancer just before retiring SO his pension was passed to my mother who passed away 2 yrs later and the whole POT between them the government had so i have 15 months before i hit 55 and then im taking all my 8 private pensions which will be sorted/moved to one big pot then semi retiring till my state pension its as simple as that :D
Hi Paul, sorry to hear that. So you inherited their pensions as a tax free lump sum (died before 75)? Consolidate pensions sure just don’t take it out of the pensions at once!
Hi James, I've done exactly as you have stated & in this volatile World. Have got absolutely, no regrets! ISAS, in my opinion are a waste of time, because of market & funding constraints. Historically, Pensions are the best investments, long term. The tax breaks are the best!
Hi James. Just met your channel, liked the things you’re saying and subbed 👍
The tax on the tax on the tax is the biggest rip off/scandal/robbery/despicable/ atrocious thing I’ve realised. So you either die poor or you accept the fact that the good ol’ government whoever they may be, are gunna give us a good shafting when we get old with the money we’ve saved all our lives 🤔…hmmmm nice!
James do you suggest we see an independent financial adviser with all this kinda stuff as I’m assuming every case is different?
Thanks
thank you
I have no issue using 25% tax free to be mortgage free at 55 and work 3 days per week Monday to Wednesday till I'm 67
In the meantime I'm gunna ram as must as I can into my work place NEST pension
@James Shack a silly question for you. How would approaching the lifetime allowance of £1,073,100 before the age of 55 affect the strategy of contributing to a DC pension? Would you stop contributing to it?
And then once you have reached the age of 55 and have retired, what is the most tax efficient way of dealing with your pensions if it is over the LTA?
My next video is on this.
@@JamesShack ah so it wasn't a too silly of a question (I hope) then!
Thank you for responding as always and I will be eagerly waiting for the next video to come out!
Taking money out of your pension is a big mistake....The money is gone in a few years ..
But if you leave it in your pension you will be getting that extra money every month long after the guy who took the lumps sum out ! which he has spent and forgotten about ..but you get that extra pension for life ..
Great video as always but I think you have assumed people use more than the 25% lump sum to buy another property, payoff your mortgage or top up an ISA. Is your guidance any difference of you are doing any of these from JUST your 25%?
No, i'm talking about people that use their tax free cash to fund those things. Often it does not make sense.
Wise words
Hi James. This is a great channel and your presentation is great! You mentioned that a good time to invest further in to a pension is 55 and over. Can you explain that please? Many thanks!
Because the only downside to a pension is that you can’t access it until 55. But if you can access it immediately, if you need you, the tax benefits are epic.
Thank you James - Pensions can be a real minefield, happy to see your pointers and tips are pretty much inline with my plans.
In the real world you often get shafted by your pension company. Like Equitable Life Daily Mirror pension group. Transferred my depleted pension into a money fund expecting a modest 6% 10 years ago, after 5 years " locked in" I was 5k worse off. Feck pensions.
What if you have a series of small pensions that are in a frozen state? Cash them in or what?