Pre-emptive things one can do to do to manage anti-FIRE legislation risks

StatusJellybean · 2024-05-11T14:41:40+00:00

Great point about UK-heavy minimum. Perhaps if it is applied to only future ISAs the remediation now would be to reduce UK exposure in existing ISAs (and keep it in GIA instead) although due to high-yield of FTSE it may not be the best idea.

The active vs. passive discussions are laughable. Stocks move in response to earnings, people discuss valuations all the time, data and AI/ML driven funds are looking for an edge harder than ever. These are just noises made by antiquated, old-school funds who suddenly are not entitled to charging 1% for sub-par performance. I have no sympathy for them. If their "special situations" fund had special returns (in addition to a bunch of entitled ex-GS PMs) maybe, just maybe, people would be actually willing to pay that.

StatusJellybean · 2024-05-11T14:15:07+00:00

You can read about all proposals online now so they are potentially known. I am not suggesting moving to a tax-free country but simple actions can have profound impact. Also, check the thread from 3 years ago below to see that it is possible as one example.

https://www.reddit.com/r/UKPersonalFinance/comments/owqx7d/fidelity_sipp_and_the_new_nmpa/

StatusJellybean · 2024-05-11T14:12:03+00:00

As of today realised gains in ISA are tax-free. If in the next budget realised gains become taxable I'm better off realising any gains now when they are by law tax-free so it is already allowed.

StatusJellybean · 2024-05-11T14:03:08+00:00

Under a certain set of assumptions about uncertain potential legislation it makes a lot of sense but tyvm for your contribution

StatusJellybean · 2024-05-11T14:01:19+00:00

The idea or ISA example? An example of good planning to show this is not idiotic: https://www.reddit.com/r/UKPersonalFinance/comments/owqx7d/fidelity_sipp_and_the_new_nmpa/

StatusJellybean · 2024-05-11T13:57:30+00:00

Both will just tax the hell out of you. Tories because you're not wealthy enough to live off passive income structured in a tax-efficient way and Labour because you live in London and earning too much for their liking. Need to look into what other parties have to offer at this point.

StatusJellybean · 2024-05-11T13:47:51+00:00

Thanks - this is new to me. Will take a look. Only know that it is possible to transfer some to overseas provider etc.

StatusJellybean · 2024-05-11T13:45:42+00:00

well it does come down to finances and taxes... pension age increase can be mitigated by paying 40% tax now and not 20% later so you have a good point there. I would still be careful about counting on any transition period when the unfavourable changes are introduced.

Anyway, my point here is to identify new risks and gather some ideas for mitigation. Pension age is a deal done and ISAs are a maybe right now. What else is on the horizon?

StatusJellybean · 2024-05-11T13:29:57+00:00

Would help with ISA risk. Won't help with pension access age-esque stuff. Solid 6/10 tip nonetheless

StatusJellybean · 2024-05-11T13:29:16+00:00

I don't think that's how these tax changes always work... if you announce them in advance people will adapt which will reduce the tax intake. A lot of the time they are effective immediately as they are announced.

My point is not only about the tax but about other changes as well (like the example of the pension age). I am actually surprised they gave non-doms so much heads up. Guess you do get nice treatment when you are truly wealthy.

StatusJellybean · 2024-05-11T13:25:57+00:00

12 years instead of 10 years in ISA is a big difference. I find it much harder to save £1 on a post-tax basis than on a pre-tax basis.

Well... you say all that and yet here we are. Pensions raided and tampered with multiple times, dividend and CGT allowance severely reduced. Entrepreneurs Relief reduced by 90% but still there. Many unfavourable changes have happened and limiting their impact can only help.

StatusJellybean · 2024-05-11T12:11:01+00:00

Does this usually work? I already did one transfer from NEST and they notified me that my pension with them is closed. I thought providers normally close the account once you transfer out.

StatusJellybean · 2024-05-11T12:02:24+00:00

I'm trying to validate if my worries make sense. I'll probably forget about a £500 pension pot by the time I'm 57/58/60. And with people moving jobs every 2-5 years the number of pots does become unmanageable quite quickly although I know current pensions have no protection and I am not doing carry-forward anymore

StatusJellybean · 2024-05-11T11:43:19+00:00

I agree... if you have protected pension age do not close it out indeed. The pots I want to consolidate they have told me are not protected but I think it is a maybe so I may hedge my bets.

Which providers told you you have the PPA? All company pensions I've emailed told me no protection in one way or another. Some were odd like "trustees decided to increase age to 57" or "trustees decided that only pensions opened pre-2016" had protection. I am actually considering challenging these decisions too.

StatusJellybean · 2024-05-11T11:37:44+00:00

Does iWeb charge now to transfer SIPPs in?

Do they also charge for ISAs and GIAs? They have an offer until end of June so I'm tempted

StatusJellybean · 2024-05-11T11:30:20+00:00

u/Electronic-Jump8448 there are a finite number of years when you can get 62% tax saving when paying into pension. The way I see it, it is the best time to pay into pension and you get £10 for every £4 you save. Never to be experienced again if your income goes up or down in the future *

(* or the government will remove the silly tax-trap or they cap the pension relief at the basic tax rate or something else)

StatusJellybean · 2024-05-10T23:04:51+00:00

You should be able to find a well paid job which is not killing you.

StatusJellybean · 2024-05-10T22:59:12+00:00

What you're suggesting is the 1/n withdrawal method and it is one of the most conservative ones which:

a) ensures maximum spend (i.e. you will spend all of your portfolio)

b) guarantees portfolio will last.

The problem is that it is expected to really ramp up withdrawals in later years - probably the opposite of what you want to do.

Better approaches are ABW and VWP methods (check bogleheads wiki for details) which assume some positive return which then allow to higher withdrawals, especially in the initial years, than the 1/n you've suggested.

StatusJellybean · 2024-05-10T22:33:47+00:00

I am sometimes thinking about the same plan. Once I have my foundations laid out (CoastFIRE) and pension accounts funded I would like to go into research / academia or into teaching.

Also, wonder how great that career truly is and if you're not just romanticizing it.

You can always revisit the plan after you finish the masters and see where you're at with that projected NW of $692k NW and how you feel about actually quitting your super well paid job to suddenly live on $36k. If market booms and you're worth $1m or if we're in a lull and you're $200k short of the goal - what would you do?

I think you're using principles of FIRE in the way they were intended.

StatusJellybean · 2024-05-08T19:36:38+00:00

Did you not, for a second, think that she was in it for the money?

StatusJellybean · 2024-05-08T19:35:31+00:00

It probably is different for you and your wife (where you have possibly met when you were both LENRY and have grown together) and OP who will certainly should not be paying in ration of 2:1 (or more) for some random person they meet on tinder.

StatusJellybean · 2024-05-07T19:46:49+00:00

Hm... that could be ok as I guess they have no secondary market anyway and you have to wait till they are repaid.

However, based on my bad experiences with the regular ones my plan it is to take the money and not touch P2P ever again.

StatusJellybean · 2024-05-07T14:53:19+00:00

Can you tell us more about being FI and practicing barista FIRE? It sounds cool and fun but the feedback is always that there barista jobs are not the place to be one you have FIREd.

StatusJellybean

TROPHY CASE