Need Help with Your Pension
Monday, March 8th, 2010Wherever you are with your retirement savings, do not be put off from considering action, it s not too late. There are still steps you can take to boost the pension you ll receive when you finish working.
Pensions are a very tax-efficient way to save. If you already have a pension, now would be a very good time to talk to us about making a single premium investment to boost it, particularly as the close of tax yr is speedily forthcoming, or starting a self invested personal pension to increase your options. You will not have to take all your pensions at the same time.
If you re employer or self employed, you can contribute up to 100 % of the value of your relevant UK earnings (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax year rising to 255,000 for the tax yr 2010/11. Investments above this annual limit are allowed but will be taxed. You can invest into any number of pension schemes (personal and/or company) each year.
You will receive tax relief on your Investments, so if you are a forty % tax payer a 20,000 investment would cost just 12,000. Basic rate tax relief is added by the government to all contributions at a rate of 20%.
High rate tax payers can obtain up to a further twenty percent tax relief via their tax return. If you earn more than 150,000 you will see the tax relief on your pensions cut from April 2011, tapering from 40 to 20 percent for those earning more than 180,000. Earners below 130,000 will not be impacted.
There s a lifetime limit on the size of your pension pot, which is currently £1.75m in the tax yr 2009/10 but rises to £1.8m for the 2010/11 tax yr. If your fund passes this, you ll incur tax charges of 55 percent if the extra benefits are taken as a lump sum and 25 per cent if taken as regular income. The income will then be subject to income tax at your highest rate.
From 6/4/10, the age at which you can start drawing your pension increases to 55. If you need to, pension benefits can be deferred until you are up to 75 years old. You may still be able to take your pension before age 55 in some circumstances, e.g. if you retire through ill-health.
Consilium Asset Management provide pension advice and retirement planning advice.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.


