Advice about Pensions
Wherever you are with your retirement plans, do not be put off from considering action, it s not too late. There are however steps you can take to increase the pension you ll get when you finish working.
Pensions are a highly tax-efficient way to save. If you already have a pension, now would be a very good time to contact us about making a single premium investment to boost it, especially as the end of tax yr is speedily forthcoming, or starting a self invested personal pension to widen your options. You won t have to take all your pensions at the same time.
If you are employed, you can contribute up to 100 % of the value of your applicable UK earnings (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax yr rising to 255,000 for the tax year 2010/11. Contributions above this yearly amount are granted but will be taxed. You can contribute into any number of pension schemes (personal and/or company) each year.
You ll receive tax relief on your Investment, 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 twenty%.
Forty% tax payers can obtain up to a further twenty % 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 % for those making 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 presently £1.75m in the tax year 2009/10 but rises to £1.8m for the 2010/11 tax year. If your investment fund passes this, you ll incur tax charges of 55 % if the extra benefits are taken as a lump sum and 25 % if taken as 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 fifty five. If you need to, pension benefits can be deferred until you are up to 75 years old. You might still be able to take your pension prior to age 55 in some circumstances, for example if you retire through ill-health.
Consilium Asset Management Limited 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.
