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[Mister Rog]

God, I bloody hate everything to do with pensions except getting the money.

I get a basic State Pension, but I also have two private pension funds, not vast but not bad. Do I buy annuities with one or both ? Or what ? If I take any cash I will get taxed, I've already taken a smallish lump sum. Yes I know the choices, but I don't really like anyof them     Al working life you're told to save in pensions etc, and then when the time comes you almost have to play roulette with the money.

[LC0112G]

God, I bloody hate everything to do with pensions except getting the money.

I get a basic State Pension, but I also have two private pension funds, not vast but not bad. Do I buy annuities with one or both ? Or what ? If I take any cash I will get taxed, I've already taken a smallish lump sum. Yes I know the choices, but I don't really like anyof them     Al working life you're told to save in pensions etc, and then when the time comes you almost have to play roulette with the money.

Do NOT take the annuity offer from whoever the pension supplier is. Go to a good local IFA - Must be an IFA not a FA. You should be able to can find a local one from www.unbiased.co.uk . It's probably the most important financial decision you'll ever take so you either have to learn everything yourself, or get a professional to advise you. If you DIY and stuff it up you're on your own. If a professional messes up you do have some comeback.

IFAs can almost always get a better annuity quote than you will get from talking directly to an insurance company. The IFA will be able to analyse your current pension and other provision and give you the required advice. You will have to pay for this advice, but this should be compensated for by the annuity quote being better.

Generally you can take 25% cash from all your pots completely tax free. The remainder can be used to buy an annuity, and you will then be taxed on any income above your personal allowance from that annuity. There are many annuity options and the IFA can explain them too you. They can also get increased rates if you have health problems - smokers, diagnosed complaints etc.

There are other options apart from annuities (drawdown, UFPLS etc) but these are advanced options and carry significant investment risk, so if you don't understand annuities then they probably aren't suitable for you. You should also note that some older pensions have very valuable guaranteed benefits - things like Guaranteed Annuity Rates (GAR) sometimes 8 or 9%. You'll struggle to get half that on the open market, so if you have a policy with a GAR it is very important you follow the rules to the letter to avoid losing it.

[Doctor Gollum]

What about investing privately as an alternative to auto enrollment schemes?

Is the growth taxed annually or only upon drawdown?

[Viral_Jim]

Depends on how you wrap it up I would imagine. Eg invest via an isa and there’s no tax until drawing it out I believe.

Just investing eg. Holding shares directly and the dividends are taxed as income. No tax on the growtg in investment value until you sell.

Not sure why you would do it that way though, you lose the tax advantage and even under auto enrolment I think the employer will also contribute.

[Migv6 le Frog Fan]

The policy of mandatory private pensions for employers is a very good one imo. The country cant afford to pay the pensions it is committed to paying, but no politician can admit it. They fund it by borrowing money, that future generations will somehow, have to pay back.
At some point in the future (decades overdue) private pensions will be the major income for retired people and the state pension can be quietly put to sleep. Thankfully, long after Ive had mine. 

[LC0112G]

What about investing privately as an alternative to auto enrollment schemes?

Is the growth taxed annually or only upon drawdown?

If you auto enrol then eventually (from 2019) you'll pay in 4% of salary, the govt pays in 1% and your employer pays in 3% (making 8% total). Nothing to stop you opting out and investing your own 4% in a different pension and the govt will pay in their 1%, but there is nothing to make your employer pay in their 3%. So you are throwing away 3% of your salary, plus you'll have to pay NI on your 4% which the govt doesn't refund.

Also, some pension co's will refuse to open a private pension for you if you have opted out of your employers auto enrolment scheme for fear of being sued by you at a later date for advising you to opt out of a better scheme.

The "growth" isn't taxed at all. When you come to retire (under current rules) you can take 25% of the pot completely tax free, and the income you take from the remaining 75% is taxed in the same way as income from a job - currently £11850 tax free, and then any extra at your normal rate (20% for most).

[LC0112G]

Depends on how you wrap it up I would imagine. Eg invest via an isa and there’s no tax until drawing it out I believe.

No tax drawing it out, but the money you pay in has already been taxed at whatever rate you pay (20%/40%/45%), and most likely had NI deducted too (13%/2%). Also your employer can't contribute to your own ISA, whereas they MUST contribute to an auto enrolment plan.

Just investing eg. Holding shares directly and the dividends are taxed as income. No tax on the growtg in investment value until you sell.

Holding large amounts of shares outside an ISA/PP wrapper is very tax inefficient and generally a messy affair. Capital Gains tax gets quite messy very quickly and as you say dividends are now taxed as income.

Not sure why you would do it that way though, you lose the tax advantage and even under auto enrolment I think the employer will also contribute.

Correct - nothing is going to beat a scheme where govt and employer contributions effectively double your initial stake from day one.

[Migv6 le Frog Fan]

What about investing privately as an alternative to auto enrollment schemes?

Is the growth taxed annually or only upon drawdown?

I may be wrong, but I believe its possible to take control of your pension investment and diy for at least part of it.
Seem to remember a couple of people at work doing something along those lines. 

[Mister Rog]

What about investing privately as an alternative to auto enrollment schemes?

Is the growth taxed annually or only upon drawdown?

If you auto enrol then eventually (from 2019) you'll pay in 4% of salary, the govt pays in 1% and your employer pays in 3% (making 8% total). Nothing to stop you opting out and investing your own 4% in a different pension and the govt will pay in their 1%, but there is nothing to make your employer pay in their 3%. So you are throwing away 3% of your salary, plus you'll have to pay NI on your 4% which the govt doesn't refund.

Also, some pension co's will refuse to open a private pension for you if you have opted out of your employers auto enrolment scheme for fear of being sued by you at a later date for advising you to opt out of a better scheme.

The "growth" isn't taxed at all. When you come to retire (under current rules) you can take 25% of the pot completely tax free, and the income you take from the remaining 75% is taxed in the same way as income from a job - currently £11850 tax free, and then any extra at your normal rate (20% for most).

 . . . . unless you are already drawing a state pension, in which case the tax free amount (£11,850) is reduced by the annual amount of that state pension. And THAT is what's pissing me off   

[Doctor Gollum]

OK, so I leave the auto enrollment running and invest the difference upto 15 ish% gross... Considering moving personal stakeholder and two small auto enrolled plans into a third auto enrollment scheme and then investing £250-300 a month into a spread of mutual funds and let compound interest do its thing... 

Just been TUPEd so await the new pension scheme with baited breath

[LC0112G]

What about investing privately as an alternative to auto enrollment schemes?

Is the growth taxed annually or only upon drawdown?

If you auto enrol then eventually (from 2019) you'll pay in 4% of salary, the govt pays in 1% and your employer pays in 3% (making 8% total). Nothing to stop you opting out and investing your own 4% in a different pension and the govt will pay in their 1%, but there is nothing to make your employer pay in their 3%. So you are throwing away 3% of your salary, plus you'll have to pay NI on your 4% which the govt doesn't refund.

Also, some pension co's will refuse to open a private pension for you if you have opted out of your employers auto enrolment scheme for fear of being sued by you at a later date for advising you to opt out of a better scheme.

The "growth" isn't taxed at all. When you come to retire (under current rules) you can take 25% of the pot completely tax free, and the income you take from the remaining 75% is taxed in the same way as income from a job - currently £11850 tax free, and then any extra at your normal rate (20% for most).

 . . . . unless you are already drawing a state pension, in which case the tax free amount (£11,850) is reduced by the annual amount of that state pension. And THAT is what's pissing me off   

As I showed earlier, it is entirely possible for someone to receive almost £15K in (old rules) state pension. If you allow this not to count for income tax purposes, then the £11850 would be available for other income from private pensions. This would mean some pensioners take home pay could be £26850 (plus winter fuel, free bus pass, free TV license etc) without paying any tax or NI. That's more than the national average wage and miles more than the average take home pay.

[LC0112G]

I may be wrong, but I believe its possible to take control of your pension investment and diy for at least part of it.
Seem to remember a couple of people at work doing something along those lines. 

Correct. Most modern pension plans allow you to chose from a range of investment options with varying levels of investment growth potential and associated risks. If you are prepared to do the learning and research the options then DIY is the way to go. If you can't DIY, then once your 'pot' reaches a certain level (circa £40K typically) then it's probably worth getting an IFA involved to manage your funds. However, initially and with small pot values its probably worth sticking with safe default funds and just letting it grow.

The above only applies to defined contribution/personal pensions. If you have a final salary, average salary or other defined benefit type scheme then the above doesn't apply.

[Bigron]

It seems that my original, tongue-in-cheek posting/rant was taken too seriously by some, but be grateful, because it has opened up a very useful and informative debate about pensions and how to get the most (least tax) out of them.
Is there anything that I can do, having been retired for over 10 years, or is it way to late and/or no options anyway?

Ron.

[Viral_Jim]

Ron:

I think if you have already purchased an annuity then you are probably in it for the long haul. I think you can “sell” your annuity in exchange for a lump sum, but it would be hard to know if that’s a good deal or not without seeking an IFA’s advice (instinctively though I think you might get shafted).

If you haven’t then I think you probably have more investment options, but an IFA maybe the way to go.

[Bigron]

Just to demonstrate how ignorant I am in these matters, what's an annuity and how would I know if I've got one?
All I know is that I have a State Pension and a small occupational one.
All the complex manipulations talked about in the posts above leave me bemused/confused and way out of my depth. 

Ron.