Financial retirement education (on YT or elsewhere)?

There is no IHT on pension funds.

Clearly if someone receives a large sum directly, as opposed to via beneficiary drawdown say, then this sum is now in their own estate for tax purposes.

Not through IHT they can’t, there is no IHT on pension benefits, they are outside of your estate for tax purposes (and as such, not covered by your will either).

The income tax rules in respect of accessing funds on death of a scheme member have been adjusted, though these are easily mitigated up to a point if it’s done right.

Clearly there is no longer an LTA test at 75 now either. Which is nice. And saves me a periodic headache :grinning:.

Be wary of transitional tax free certificates.

There could be some situations where this is a good plan. Others, not so much.

HMRC are suggesting that if you haven’t yet taken any tax free cash, you may want to defer doing so until the rules are legal fact and in place. Which is likely some months off yet. At least!

Good summary of the new tax-free cash rules posted by Pete Matthew today - it’s complicated!

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Normally, an employee’s pension contributions do not reduce an employee’s liability to NICs. However, you may be confusing this with the employer’s position: where it is able to reduce it’s liability to NICs on it’s (employer’s) contribution to the pension scheme. I understand treatment of certain ‘salary sacrifice’ arrangements may allow relief but these are not typical in my experience.

As I understand it, whilst a personal pension is not subject to IHT when the owner dies, any income that is drawn down by a beneficiary (ies) where the original owner dies at 75 years or more is taxable (under income tax rules) at that beneficiary’s (ies’) marginal rate (s) of income tax. Otherwise, beneficiary draw down would be normally free of income tax.

I should add: There is an instance where both employer and employee benefit from NIC reductions in AVCs paid and that is where the employer offers a ‘Shared Cost AVC Scheme’. It takes advantage of Salary Sacrifice Arrangements and not all employers operate such schemes. There is plenty on the ‘net to explain the mechanics where such a scheme is offered.

In the scheme that we were offered, i would receive a very small immediate benefit, but with my pension taking a hit. My employer would receive a benefit 3 times mine.

I elected to not take up their “amazing” offer.

Are you saying this in relation to your employers salary sacrifice scheme?

That is rather worrying As I’ve never checked what the salary sacrifice scheme consists of that I’m a part of!

I naïvely assumed they wouldn’t offer it to us unless it was a good deal in both the immediate term and long-term.

Yes. And I recall that during the big all-staff “reveal meeting”, the MD got a big antsy at the lack of enthusiasm, and awkward questions from the room full of cynical engineers!

TBF, this was about thirty years ago, so the rules may have changed……check first.

(I didn’t opt out of SERPS either, when that was being promoted as the “answer to everything”. Didn’t trust the buqqers even then!)

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@suzywong Can you remember how this scheme worked?

How did it make your Pension take a hit?

It was a very long time ago, and I really can’t remember the details, other than it would negatively impact my state (I presume) pension (which, at that time, was years into the future) by a couple of percent.

Noted - - thankfully not something I have to worry about.

Please do correct me, but I really empathise with people who have been impacted by the events of the last few years e.g. where things have changed which, perhaps, would have led parties down other avenues for their various pension elections (and splits), obviously worse for those who paid any LTA tax ahead of the changes. It’s truly perverse IMHO.

Don’t disagree.

On the one hand I feel for people who committed to annuities right before 2015 for instance, otoh the Govt. did right by everyone else.

But then, I still firmly believe that 95% of the population don’t/won’t/can’t comprehend the magnitude of the sea change that was 2015 pensions flexibility rules and what a massive ‘favour’ George Osborne did us all, not only for pension fund owners but their kids and their kids too.

Mind, it is a complex environment and most of the commentary I see around diy investment and pensions is around portfolio management, the ability to pick one’s own funds etc., i.e. anyone can do it, which again I don’t disagree with up to a point. However lots of people still go by investment recommendations from other people one way or another and still manage to come unstuck e.g. Woodford and I suspect another one to come.

Much of the ‘advice’ and value we give is around rules and regulations, making best use of them plus acting as a sounding board, a source of common sense and experience, a bit like being someone’s dad! (We’ve been saying for years the LTA in its last format and particularly the LTA test at 75 couldn’t last, so don’t fret about it if you’re not there yet). That and taking all the work and stress around this out of people’s lives. And many DiYers do get very stressed about it on a daily basis.


Stopped working a few weeks ago but haven’t yet taken pension as have a small amount of savings and - probably naively - thinking that if I wait 'til I’m 60 in 7 months time it won’t be subject to reduction for early claiming.
No idea if should take minimum or maximum TFLS - seems to me that you can only know this if you know how many years you have left!
Don’t want to have stress of managing savings - would rather think F*** It and drink wine :joy::joy:

Whoever your pension provider is, they should be able to provide you with a forward projection to your desired retirement/pension drawing date. And, IME, if you are mulling decisions and options, it can take a few months to get your cogs in gear and for a fund to deliver all salient details around your options – obviously the more time you can give an adviser, should you choose this route, then the better.

Another good video from Pete, this time considering the impact of possible reintroduction of the LTA. This chap has a real talent explaining rather complicated and technical issues.

Does anyone know about or has anyone used the three year annual allowance carry forward option for investing in their DC Pension?

I think this is a way to Invest in a tax efficient manner in one’s pension in excess of the annual allowance.

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Here is a video about that in case anyone is interested:

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Yes @JimDog - I am doing this at present, and will use up my remaining carry forward allowance this financial year. Given the potential for a change of government, and ambiguity on what might follow with pensions, I’ve decided to take advantage of what is on offer now.

You can carry forward unused annual allowances from the 3 previous tax years - and, as I understand it, you do not need to report this to HMRC. It’s pretty flexible. If you have unused annual allowances from more than one year, you need to use them in order of earliest to most recent. If you only need to use some of your unused annual allowance or alternative annual allowance from a tax year, you can use the rest in a future year.