Pension now set up, do I still need a financial adviser?

[The Wino]

Who's going to be the richest in the Graveyard then ?

That is a worry. Of course it would be a lot easier to plan to spend up if you knew when you were going to arrive there but if the answer came back as tomorrow it would be a bit disappointing

 

[coroner]

That is a worry. Of course it would be a lot easier to plan to spend up if you knew when you were going to arrive there but if the answer came back as tomorrow it would be a bit disappointing

That is a worry. Of course it would be a lot easier to plan to spend up if you knew when you were going to arrive there but if the answer came back as tomorrow it would be a bit disappointing

My mum used to say no pocket's in a shroud.as viv whats her face said SPEND SPEND SPEND now get me the new motorhomes availability list.

 

[Kozikot]

My mum used to say no pocket's in a shroud.as viv whats her face said SPEND SPEND SPEND now get me the new motorhomes availability list.

Your mum was right, you Can't take it with you...

 

[Silver-Fox]

*

thanks for the offer but I am not registered or qualified now as a Financial adviser any more as I am retired. This means that any information I give you is not specific to any one individual and should be crossed checked with a registered/qualified adviser, one who is Independent and not tied to one product provider.
Should you require specific financial advice I can recommend a very good adviser who will charge fees for his advice and services and is worth the money, I use him because I trust him and it helps that I helped train him

Now that’s the kind of recommendation people need

 

[Otter Spotter]

Who's going to be the richest in the Graveyard then ?

Proper financial planning is designed to make your wealth work for you and ensure that only the people you want to get their hands on it do so, not the Tax Man, so if you want to make sure you spend the last penny on your death bed fine, Financial Planning will tell you when to die

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[68c]

So back to the original post. I know the pensions companies insist you have a financial advisor to set up a pension but do you still need one once you start drawing on it. Surely your pension company does all the clever financial stuff then. The pension company take there cut each month, do I need the IFA to continue taking a slice.

 

[Kozikot]

Proper financial planning is designed to make your wealth work for you and ensure that only the people you want to get their hands on it do so, not the Tax Man, so if you want to make sure you spend the last penny on your death bed fine, Financial Planning will tell you when to die

Bit like Amazon, Google, Costa Coffee then...

 

[Otter Spotter]

So back to the original post. I know the pensions companies insist you have a financial advisor to set up a pension but do you still need one once you start drawing on it. Surely your pension company does all the clever financial stuff then. The pension company take there cut each month, do I need the IFA to continue taking a slice.

No, the pension company will manage the funds and pay out when required but, they cannot give you advice on how you should draw your money, invest the remaining pots, stop the tax man getting their mits on too much. The pension company do things using the legislation but they need to be told what you want and need and for that you will need advice Going forward. See my post #5

 

[68c]

OK, many thanks. As things seem to be going well I think I will stay with the IFA. Just have to cut back on coffee and cakes to save the cash. I must admit I am surprised that I have been drawing down for five years and yet there is more in the pot than when I started.
Thanks again for all the advice.

 

[Otter Spotter]

OK, many thanks. As things seem to be going well I think I will stay with the IFA. Just have to cut back on coffee and cakes to save the cash. I must admit I am surprised that I have been drawing down for five years and yet there is more in the pot than when I started.
Thanks again for all the advice.

That’s great he’s doing his job and earning his keep, let me have his name and I will send him my bill for saving his job

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[chaser]

That’s great he’s doing his job and earning his keep, let me have his name and I will send him my bill for saving his job

Never had a pension, but always been interested in investing in stuff, houses, ground, tractors.
So following this thread just for interest.
Now how do they work, you see folks who say they have upwards of a million pot, do they ever see this or just the interest off it?
If you are drawing off it every month but it's still going up, why? When is it going to be any use to you.
If you die do you lose it all? Or what happens to it?
If you have enough to live on and are comfortable, why does it matter if the pot is going up or down unless you are eventually going to buy a castle or something, but of you are in your seventies is there anything you want?
Don't understand it I'm afraid
Please feel free to knock me back if I have it wrong.

 

[Otter Spotter]

Never had a pension, but always been interested in investing in stuff, houses, ground, tractors.
So following this thread just for interest.
Now how do they work, you see folks who say they have upwards of a million pot, do they ever see this or just the interest off it?
If you are drawing off it every month but it's still going up, why? When is it going to be any use to you.
If you die do you lose it all? Or what happens to it?
If you have enough to live on and are comfortable, why does it matter if the pot is going up or down unless you are eventually going to buy a castle or something, but of you are in your seventies is there anything you want?
Don't understand it I'm afraid
Please feel free to knock me back if I have it wrong.

Hi Chaser,
No I will never anyone knock anyone back.
how do they work? Wow that’s a doozy!
From age 18 anyone working or not can start paying (contributing in tech terms) into a pension, in simple terms a savings plan which collects tax relief on the way in, is invested tax free and when you want to start taking money from it (taking benefit) you have many options as to how you take it and you may pay tax on some that you withdraw.
The pension can be invested in A number of things, invested funds, Investment trusts, Commercial property etc.

In theory you can withdraw all of the pension after age 55 yrs but in practice you would be mad as you would pay tax at your marginal rate (possibly highest rate) on 75% of the pension fund.

Most People will take up to 25% of the pension fund as tax free cash(known as Pension commencement Lump Sum )
then start to withdraw an income on which you may pay income tax, after you have used up your income tax allowance currently £12,500 per annum.
there are a number of ways to take income from a pension but most people either go into ’Drawdown’ or buy an annuity which is a guaranteed income for life.
Pension Drawdown plans let you take monies from the continuing invested monies and in an ideal world you would want to draw enough to enjoy the lifestyle you want whilst your pension fund still grows to give you inflation proofing. In practice, investments will go down as well as up, but a well diverse invested pot will smooth out the ups and downs.

why do you want it to continue growing, many reasons , inflation proofing, wanting to provide a potentially tax free pot to pass on to partner, kids etc.

With Personal pensions as apposed to Finally salary company pensions, the pot is yours so it will be available on your death to pass on to someone.
Finally salary schemes have different rules and they generally don’t pay a lump but just an income to a spouse until she dies, some will pay to children but they are all different.

regarding your comment about ’why‘ I agree that in your 70’s it’s possible your needs are low, but having a decent pension pot can give you a sense of security and if care fees becomes an issue then having a decent pension pot gives you the choices of where you stay, what quality of care you get, what you can do to help others.
If you haven’t got anything saved or something to sell then just a state pension will not give you security or quality care or option to pass much to others.

I hope that helps and now I now need to go into a dark corner with a drink, I have brain fade

 

[Geo]

I have been retired for five years, taking a monthly drawdown, did not take lump sum up front so get 25% tax free each month. The pension is running well. I see my financial adviser once a year for an update, get told all is OK see you next year. They are taking a percentage of my pot yet do not seem to do much after the initial set up. Do I still need a financial adviser, would I be better off saving their annual fees and just get advice for specific reasons, change in lifestyle etc.

Asking for financial advise on a Motor Home forum ? Yes i'd say you do

 

[chaser]

Hi Chaser,
No I will never anyone knock anyone back.
how do they work? Wow that’s a doozy!
From age 18 anyone working or not can start paying (contributing in tech terms) into a pension, in simple terms a savings plan which collects tax relief on the way in, is invested tax free and when you want to start taking money from it (taking benefit) you have many options as to how you take it and you may pay tax on some that you withdraw.
The pension can be invested in A number of things, invested funds, Investment trusts, Commercial property etc.

In theory you can withdraw all of the pension after age 55 yrs but in practice you would be mad as you would pay tax at your marginal rate (possibly highest rate) on 75% of the pension fund.

Most People will take up to 25% of the pension fund as tax free cash(known as Pension commencement Lump Sum )
then start to withdraw an income on which you may pay income tax, after you have used up your income tax allowance currently £12,500 per annum.
there are a number of ways to take income from a pension but most people either go into ’Drawdown’ or buy an annuity which is a guaranteed income for life.
Pension Drawdown plans let you take monies from the continuing invested monies and in an ideal world you would want to draw enough to enjoy the lifestyle you want whilst your pension fund still grows to give you inflation proofing. In practice, investments will go down as well as up, but a well diverse invested pot will smooth out the ups and downs.

why do you want it to continue growing, many reasons , inflation proofing, wanting to provide a potentially tax free pot to pass on to partner, kids etc.

With Personal pensions as apposed to Finally salary company pensions, the pot is yours so it will be available on your death to pass on to someone.
Finally salary schemes have different rules and they generally don’t pay a lump but just an income to a spouse until she dies, some will pay to children but they are all different.

regarding your comment about ’why‘ I agree that in your 70’s it’s possible your needs are low, but having a decent pension pot can give you a sense of security and if care fees becomes an issue then having a decent pension pot gives you the choices of where you stay, what quality of care you get, what you can do to help others.
If you haven’t got anything saved or something to sell then just a state pension will not give you security or quality care or option to pass much to others.

I hope that helps and now I now need to go into a dark corner with a drink, I have brain fade

Excellent, thank you

 

[Ingwe]

Wow, what a timely and interesting thread and especially the input of Otter Spotter (and others) in the know.

Why I say timely, is because my MIL died in April aged 96. My wife is one of three daughter beneficiaries and the sole executor. Estate is largely sorted save for one fund on which MIL was receiving drawdowns. At death, there was about £300k left. Wife was requesting the payment of this sum into the estate account when the Pru said that there may be an income tax liability.

Now this came as a shock as the MIL‘s IFA hadn’t warned of this (and it may be the case that there isn’t an actual liability to tax). We’ve asked him to check on this liability before requesting the payment out. This thread suggests it may be the liability that arises on beneficiaries if the death happens after age 75 where there is a lumps sum remaining. The rough division would be £100k to each beneficiary. Are there any reliefs available to the beneficiaries (or indeed to the MIL) to set-off against this £100k?

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[Kozikot]

Wow, what a timely and interesting thread and especially the input of Otter Spotter (and others) in the know.

Why I say timely, is because my MIL died in April aged 96. My wife is one of three daughter beneficiaries and the sole executor. Estate is largely sorted save for one fund on which MIL was receiving drawdowns. At death, there was about £300k left. Wife was requesting the payment of this sum into the estate account when the Pru said that there may be an income tax liability.

Now this came as a shock as the MIL‘s IFA hadn’t warned of this (and it may be the case that there isn’t an actual liability to tax). We’ve asked him to check on this liability before requesting the payment out. This thread suggests it may be the liability that arises on beneficiaries if the death happens after age 75 where there is a lumps sum remaining. The rough division would be £100k to each beneficiary. Are there any reliefs available to the beneficiaries (or indeed to the MIL) to set-off against this £100k?

Think the IT threshold is now 325K...thats why it's a Good idea to leave in a Discretionary Trust when one is gone...IMO !

 

[Ingwe]

Think the IT threshold is now 325K...thats why it's a Good idea to leave in a Discretionary Trust when one is gone...IMO !

I understand the IHT limit of £325k (currently). I think that the liability I’m (now) fretting about is the tax due on an inherited pension fund. As I understand the position, as the sum remaining in the deceased’s pension pot is £300k this is less than her lifetime allowance of £1,073,100 so shouldn’t attract tax in the hands of the beneficiaries.

 

[Kozikot]

I understand the IHT limit of £325k (currently). I think that the liability I’m (now) fretting about is the tax due on an inherited pension fund. As I understand the position, as the sum remaining in the deceased’s pension pot is £300k this is less than her lifetime allowance of £1,073,100 so shouldn’t attract tax in the hands of the beneficiaries.

Think you've answered your own Question...

 

[Ingwe]

Think you've answered your own Question...

I sure hope so,

 

[The Wino]

I sure hope so,

I'm no expert but would have thought that the estate value would be the total of any property plus bank accounts savings etc including the pension. You need an expert opinion and it will probably go to probate. You can do probate yourself it wasn't that difficult.
I think the lifetime allowance is to do with how much you can have in a pension nothing to do with what happens when you go or inheritance tax.

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[The Wino]

I'm no expert but would have thought that the estate value would be the total of any property plus bank accounts savings etc including the pension. You need an expert opinion and it will probably go to probate. You can do probate yourself it wasn't that difficult.
I think the lifetime allowance is to do with how much you can have in a pension nothing to do with what happens when you go or inheritance tax.

Just looked it looks like there income tax to pay on the pension funds heres a link
https://www.gov.uk/tax-on-pension-death-benefits
I think it's going to be worth getting some professional advice

 

[Otter Spotter]

I'm no expert but would have thought that the estate value would be the total of any property plus bank accounts savings etc including the pension. You need an expert opinion and it will probably go to probate. You can do probate yourself it wasn't that difficult.
I think the lifetime allowance is to do with how much you can have in a pension nothing to do with what happens when you go or inheritance tax.

No not including pension, pension is always outside the estate.

 

[The Wino]

No not including pension, pension is always outside the estate.

I suppose the logic is someone had income tax relief on the way in so it's fair enough paying income tax on the way out if it's not been used for a pension at the age you would reasonably have needed it. I still think they make the rules complicated so people can't really do it themselves.

 

[68c]

Never had a pension, but always been interested in investing in stuff, houses, ground, tractors.
So following this thread just for interest.
Now how do they work, you see folks who say they have upwards of a million pot, do they ever see this or just the interest off it?
If you are drawing off it every month but it's still going up, why? When is it going to be any use to you.
If you die do you lose it all? Or what happens to it?
If you have enough to live on and are comfortable, why does it matter if the pot is going up or down unless you are eventually going to buy a castle or something, but of you are in your seventies is there anything you want?
Don't understand it I'm afraid
Please feel free to knock me back if I have it wrong.

The problem is not knowing when you will die. Many will live twenty to thirty years past retirement but the inevitable inflation will devalue it, few investments can keep up with long term inflation. What did your house cost thirty years ago? So you need spare money in the pot in case you are lucky enough to live a long time.

 

[68c]

No not including pension, pension is always outside the estate.

Just don't die after age 75, then the beneficiary does pay the tax.

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[The Wino]

The problem is not knowing when you will die. Many will live twenty to thirty years past retirement but the inevitable inflation will devalue it, few investments can keep up with long term inflation. What did your house cost thirty years ago? So you need spare money in the pot in case you are lucky enough to live a long time.

I think the history is that on average investments have kept up with inflation savings haven't.

 

[68c]

I suppose the logic is someone had income tax relief on the way in so it's fair enough paying income tax on the way out if it's not been used for a pension at the age you would reasonably have needed it. I still think they make the rules complicated so people can't really do it themselves.

The government isn't that daft, they let you have tax relief on the ten grand you pay in then tax you on the hundred grand it has grown into over the years.

 

[The Wino]

The government isn't that daft, they let you have tax relief on the ten grand you pay in then tax you on the hundred grand it has grown into over the years.

It depends some no tax payers get it grossed up as though they were paying tax at no cost. The other thing is that the governments money is ours so if there were no tax liability we would either have to pay it on something else or have reduced services

 

[Otter Spotter]

I suppose the logic is someone had income tax relief on the way in so it's fair enough paying income tax on the way out if it's not been used for a pension at the age you would reasonably have needed it. I still think they make the rules complicated so people can't really do it themselves.

No, they did to make us retired IFA’s look clever

 

[bigtwin]

Should you require specific financial advice I can recommend a very good adviser who will charge

If that doesn’t indicate the value of an IFA, nothing will!

No not including pension, pension is always outside the estate.

I trust that you meant

pension is always outside the estate, from an IHT perspective

Ian

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