Pension Advice
Wherever you are with your retirement objective, don t be put off from taking action, it s not too late. There are still steps you can take to boost the pension you ll get when you finish working.
Pensions are a very tax-efficient way to invest. If you already have a pension, now would be a very good time to talk to us about making a lump sum investment to boost it, particularly as the end of tax year is quickly emerging, or starting a SIPP to improve your choices. You will not have to take all your pensions at the same time.
If you are employed or self-employed, you can contribute up to 100 % of the value of your applicable UK salary (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax year rising to 255,000 for the tax year 2010/11. Investments 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 obtain tax relief on your contributions, so if you are a 40% tax payer a 20,000 contribution would cost just 12,000. Basic rate tax relief is supplied by the government to all contributions at a rate of twenty%.
Forty percent tax payers can claim 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 per cent for those making more than 180,000. Earners beneath 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 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 per cent if the extra benefits are taken as a lump sum and 25 percent 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 55. If you need to, pension benefits can be postponed until you are up to 75 yrs old. You might still be able to take your pension before age fifty five 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.
