Some weeks ago I wrote about My Walter White Moment and the possibilities it opened up with my pension. The process drags on.
The speed of IFA, employer’s pension administrator and the occasional issue with my non-standard post divorce residency haven’t made it an instant process.
But it is nearly done with.
My “Gold-Plaited” final salary scheme is worthless to a dead man. It dies with me. Transferring the cash value out of the scheme and placing it into a personal pension makes it inheritable. A rather pleasing six figure sum will go to my kids in the highly likely event of me popping my clogs before I’m 55.
So this opens up an interesting timeline for me as a 49 year old. It looks something like this:
Die before May 2019 and the pension pot, bizarrely, becomes subject to inheritance tax. In other words HMRC will skim 40% off my kids’ inheritance. Yes, the state has a 40% tax on the terminally ill changing their pensions and then dying.
Die between May 2019 and January 2023 and they get the lot, tax free. Yes, that three and a half year window is the optimum time for me to depart this mortal coil. Cease to be.
2019-2023 is also a time period that is ideal for building up credit card debt. But only if I can guarantee dying before I access my pension. The idea of racking up £50,000 on the range of Barclaycard and AMEX limits I have and leaving no estate to clear those debts is a new reckless side of me that has never surfaced before. Think George Best …
As I pass my birthday in January 2023 I’ll be able to draw on the pension which I’m intending to leave to the kids. This is bad news for them but good news for me. Although if I have survived that long I have a judgement call to make. How long will I live for? Do I assume I’m going to make it to 90 and draw a modest pension, or do I blow the lot within five years because I’m still a dead man walking?
If I die between January 2023 and January 2043 the kids get whatever’s left in the pension pot. Big or small. And in the miraculous event of death after January 2043 they still inherit the pot, but have to pay income tax at their highest rate on it. Or merge it tax free with their own pension.
I am beginning to think crystal meth production would give me less to worry about.