07 Oct 2017, 19:22
08 Oct 2017, 07:14
08 Oct 2017, 12:36
RobertT wrote:Pensions can be very individual things based on your own circumstances and it’s impossible to say if that’s the best thing to do without knowing a lot more detail of your overall financial situation.
But for what it’s worth, I’m planning on doing more or less the same as you suggest.
My main scheme benefits are not enough to retire on alone, but I have a sizable amount in AVC’s and will still be able to retire at 60 quite comfortably. Therefore I see the new scheme from 2018(whatever it turns out to be) along with a personal pension I already have, as a way of funding early retirement from 55.
While DC pensions are rubbish at providing an income for life due to low annuity rates, in my opinion they’re actually quite good for either topping up a DB pension until SPA for example, or for funding early retirement before a DB scheme kicks in. But whether that applies to any individual will always come down to circumstances!
Based on the current Personal Tax Allowance of £11,500 per year and no other income, it’s actually possible to take a tax free income of around £15,332 per year from a DC pension. With the first 25% of that being tax free and the rest just below the PTA.
My advice would be to take advantage of the employer contributions along with the tax breaks. Make sure you manage the money well and preferably not pay any tax on it, and give yourself an earlier retirement. As long as it’s the best thing for you!