Can a pension be too large?

We're getting into the groove of doing video podcasts now, and today we have another mixed bag of questions. They include the tax implications of moving abroad, whether to start a pension in your 60's, whether it's possible for a pension fund to be too big and lots more besides!

Shownotes: https://meaningfulmoney.tv/QA34

01:24 Question 1

Hi Pete and Roger Thanks for the fantastic podcast, YouTube videos (and book) I have learnt so much.

My question is essentially about whether to overpay my mortgage or invest. I have watched Pete's videos on this subject but just wanted to check if my situation changes anything.

I'm a 41 year old Firefighter and I am in the Firefighters Pension Scheme. I am recently divorced and as such have had to start again with a 25 year mortgage currently fixed for 5 years at 4.1%.

Essentially should I focus on overpaying this mortgage so that it is definitely paid off by the time I am 60 (When I can retire from the Fire service) as I already have the DB Firefighters Pension.

Or would I still be better to invest this money in a stocks and shares ISA and use it to pay off the mortgage at a later date? My disposable income for whichever option would be around £200 a month.

Lastly I will probably continue working past 60 yrs old but it may be in a different profession as by that age I may not feel like dragging hose and climbing ladders anymore!

Thanks again, James

05:33 Question 2

Hi Pete and Roger,

I've been listening to your brilliant podcast since COVID, so around 5 years now and always look forward to the new episode coming out.

I don't really have a financial related question for you, more some advice...

I've tried to educate my daughter on personal finance and I think she now has a good grasp and is interested in becoming a financial advisor. She is now 19, has decent A levels and has just completed an Art foundation course. She has University offers for September which she has deferred as she really doesn't want to go! We live in West Kent (nr Tunbridge Wells) and I've been looking for trainee, bottom of the rung, Financial advisor jobs for her but I can't seem to find anything. She could commute to London, if required but would rather stay local if possible. Do either of you have any suggestions about how she might be able to get into the industry? We're happy to pay for courses of that helps her but not sure what would be best.

Sorry for the long email, any advice would be very gratefully received.

All the best and keep up the great work Matt and Belle Hart

13:23 Question 3

Hello to Pete and Rog,

Thanks for the podcast so far, my family is in a much sounder financial footing since I've started putting into action some of the basics you've spoken about previously. ISAs, pensions and insurance all ticking along nicely now - thanks to you!

I have a question about my pension, is it possible to add too much?

My thoughts are, if my pension pot in today's money is worth £1.25m when I retire, I can take the 250k tax free and £40k a year thereafter, anymore than this and I would be paying 40% tax on my drawings. Are there benefits I'm missing of having a larger pot (say £2m)? Not one I need to worry about yet, if at all, but it's always puzzled me!

Many thanks for the content, keep up the good work and enjoy the sunshine this weekend! Adam

18:30 Question 4

Hi Pete & Rog,

Have been a long time listener and have loved your double act with the self effacing banter alongside sound, sensible guidance on the minefield that personal finance can often seem to be. Listening whilst walking the dog is like chewing the fat down the pub with a couple of great friends,

So my situation is this... 47 years old, married with two kids (11/14).

Myself and my wife both have good jobs, own jointly (own names) 8 x BTL properties generating a profit. Equity in Portfolio is about £400k Portfolio was built to provide additional income and to support us in retirement (either the income or by selling)

We have our own home (mortgaged) and are in the process of moving to a bigger place as we're growing out of where we are. This will come with a bigger mortgage as we're scaling up so to minimise the increase in monthly payments we're increasing the term back to our state retirement ages (which is a bit depressing!).

So our ideal plan is to have the "choice" to semi retire / work as much or little as we want by age 57 - so around 10 years from now but we are not sure whether this is realistic and the best way to set things up to achieve it if it is. We would probably still work part-time beyond 57 but would want to have other sources of income that could support a comfortable lifestyle.

To add to the complexity, but in a good way, I'm also in the process of changing jobs and the new job comes with a £20k pa pay rise and a matched pension at 6%. This is obviously lower than my current employers scheme but I plan to at least match what currently goes into my current employer pension one way or the other.

So after what must be one of the longest pre-ambles you've ever read here are my question(s):

In terms of where we are now do you think getting to a position where we have a choice to retire/semi retire in 10 years is realistic and what are the key things we should be doing now ten years out taking into account our circumstances?

How would you approach the pension situation with my change of employer, my thought was to make contributions to my private pension to cover the overall reduction (9% matched to 6% matched) between employers so that I'm still putting in 18% overall. I think I may be able to put as much as I like into my new employers scheme though (but they'll only match 6%) so would this be a better option?

In terms of our mortgage in 10 years it will still be around £350k so we would want to reduce this significantly or even pay off in full at that point. My thought was to sell 5-6 of the BTL's over 5 years leading up to age 57 to pay it down however this obviously reduces our passive income from the portfolio and we'd pay a chunk of CGT along the way. Are there any better ways of achieving the same result?

I hope I haven't broken any rules around length of email and number of questions, I can only hope you'll treat this with your customary humour and patience!

Keep up the great work guys. Best Regards, Nick

25:15 Question 5

Hello Pete and Roger -I'd like to say how your podcast has really helped me to focus on preparing for retirement ,so thank you .

My question is I'm in my early 60,s I have 2 x Db pensions which will pay about £22000 Pa immediately if I choose , a full state pension at 67 and I have no mortgage and cash savings of £235000 half of which is in cash ISAs. My DB Pensions and state pension will be enough for my life style .

I may move home next year hence the large cash savings and also because I recently divorced and that's how the settlement added to that figure. It was a coercive relationship and I'm so worried now I hold too much cash as I never had my own money to invest in a pension. Prior to the marriage and children I did work and pay into a pension which will provide half of the DB pension as stated earlier but that all stopped when I married.

Should I start a personal pension now so close to retirement if I know I'll have spare cash to pay the max £3600 inc tax relief to take advantage of the tax relief and build up a pot not for income necessarily but for care home fees /inheritance tax costs for my two young adult children? Or shouldn't I worry?

Many thanks for your help. Charlotte.

30:13 Question 6

Dear Pete and Rog,

Thank you so much for your incredibly valuable podcast. I've learned a great deal from it and really appreciate the clarity and insight you bring to complex financial topics. Can't wait for the Youtube version to finally see what Rog looks like!

I had a question that I hope you might be able to shed some light on. My wife is from Slovakia, and we're likely to retire there in the future with our two children. I understand that capital gains tax and inheritance tax are both zero in Slovakia. However, I've read that UK-situs assets remain within the scope of UK inheritance tax even after leaving the UK, and that these would seem to include UK-domiciled OEICs such as the Vanguard LifeStrategy 100% fund, which I currently hold in a general investment account.

Would it therefore make sense to consider switching from the LifeStrategy 100% UK domiciled fund to an Ireland-domiciled ETF such as the Vanguard FTSE All-World UCITS ETF (VWRP)?

Would doing so resolve the issue of UK IHT exposure on those Situs assets?

Or transferring the UK OEICs to a global investment platform, would that work (seems too easy to be true)?

Any other tips to look into before making the big move abroad?

Thank you very much again for your time, and for all the invaluable information you share! Please keep it going ! Best regards, John