Advise on Pension

[Captain Nemesis]

Have I misunderstood the way that offset mortgages work?

Surely if the £22K is put into that account it will effectively be earning interest at whatever the mortgage interest rate is. £1K not paid in interest is £1K earned. From a cash-flow POV its like the mortgage has been paid off, but the money is still there if it is ever needed or if a good opportunity comes along?

 

[Bodd]

Have I misunderstood the way that offset mortgages work?

Surely if the £22K is put into that account it will effectively be earning interest at whatever the mortgage interest rate is. £1K not paid in interest is £1K earned. From a cash-flow POV its like the mortgage has been paid off, but the money is still there if it is ever needed or if a good opportunity comes along?

Pretty much so. But the temptation is always there just pick at it... that's no good for no one...

 

[motorbiking]

I think I would personally clear the loans, but then I’m a bit old school.

We may well be due a bit of a reset in the next 1-2 years (which will hit your pension pot) from an investment point of view, so borrowing to invest could be a bit risky.

if you haven’t maxed your share ISA allowance, you could drip the loan repayments in to a stock ISA - say ftse 100 or 250 ETF. Pension management fees are not usually good value. However, you could get tax relief on the contribution, so this is worth looking at.

see guide : https://www.pensionbee.com/pensions-explained/pension-basics/should-i-pay-into-pension-or-isa

 

[Bodd]

Could I in theory pay let's say £30000 into my pension.
Then a year or so time take out that amount as a tax free lump sum and pay off my mortgage.?

 

[JohnD]

You can take out up to 25% of your pension fund tax free

Some people do that when they start drawing their pension. You must be over (I think 55).

When are you thinking of retiring?

 

[Bodd]

You can take out up to 25% of your pension fund tax free

Some people do that when they start drawing their pension. You must be over (I think 55).

When are you thinking of retiring?

I'm just turning 55. I've got no plans on retirement apart from that I would like to retire at 70.

 

[Mottie]

I'm just turning 55. I've got no plans on retirement apart from that I would like to retire at 70.

When did you set your pension to mature by? When I took mine out I chose it to mature at 60 so I’ve been getting it for three years now.

 

[Bodd]

It may be crafty but I'm thinking of paying in £30000 then the government would pay 20% on that? Or is it tax relief.
Then take that £30000 to pay my mortgage and other loan off that's attached to my Mortgage.
out of my pension tax free.

Does my mathes add up and is this legal

 

[Bodd]

When did you set your pension to mature by? When I took mine out I chose it to mature at 60 so I’ve been getting it for three years now.

70

 

[Mottie]

Blimey, how old was you when you started it?

 

[Bodd]

Blimey, how old was you when you started it?

31...

As long as I can breath I want to work. Apart from the big C setting me back I have energy and no desire to sit back with my slippers and put my feet up.

I'd only be paying tax on it if I was still earning so no point claiming until I really can't work no more

 

[Bodd]

I should see a financial advisor... how much do they cost and are they worth it?

 

[Mottie]

Good on you for choosing a retirement age of 70. I wouldn’t think many in manual jobs would continue working to that age - I’m certain I couldn’t. BTW, you’ll be paying tax on it anyway as your state pension will take up most of your tax free allowance. You’ll be paying tax on your state pension too if you’re still working at 66.

 

[Bodd]

Good on you for choosing a retirement age of 70. I wouldn’t think many in manual jobs would continue working to that age - I’m certain I couldn’t. BTW, you’ll be paying tax on it anyway as your state pension will take up most of your tax free allowance. You’ll be paying tax on your state pension too if you’re still working at 66.

Would it benefit me in any way if I delayed claiming my state pension until I'm 70

 

[Bodd]

Good on you for choosing a retirement age of 70. I wouldn’t think many in manual jobs would continue working to that age

I have a fella I use when I'm putting flues through roofs. He just turned 70 he still up thre for me