Pension advice for F-i-L nearing retirement

twogoodtwo

Situation:

Father-in-law going to retire in 3 years time.
Currently has a generous final salary scheme (although likely to modified/closed before he reaches retirement age sadly).
Marginal rate tax payer of 40% for first time in his life
Has recent inherited money c.£25k
Makes full use of his ISAs
Very cautious with money

I'm trying to persuade him to go to an Independent Financial Advisor to see if he can make use of his 40% tax relief on paying extra money into a personal pension but all I get is "they will just try to sell me something that I don't need/understand"

Therefore, can anyone here suggest an benefits of paying money in pension and somehow getting tax uplift and then being able to at least take some money back out in 3 years.

I want to go back to him and say that there are potential ideas in order to encourage to go and speak to a professional.

All/any advice greatly appreciated!

margaretclare

If FIL has/will have money that he doesn't need immediately to live on e.g. the £25K, he could set up a new pension scheme like a SIPP or a stakeholder. Any money he puts into this will have his basic tax rate added to it, and if that's 40% then so be it. You mentioned taking it out in 3 years - in fact he doesn't need to access this new pension scheme until he's 75 when he has to convert it into an annuity or start drawdown, in the meantime his new pension 'pot' can be growing, until he really does need it, and none of us knows what our needs may be in the future.

HTH

MrChips

twogoodtwo wrote: »

Situation:

Father-in-law going to retire in 3 years time.
Currently has a generous final salary scheme (although likely to modified/closed before he reaches retirement age sadly).

All/any advice greatly appreciated!

This would only affect future accrual of benefits. If he has accumulated several years of service already, any future changes should only have a minimal effect on his overall benefits.

EdInvestor

Is his pension from the f/s scheme plus hist state pension likely to be anywhere near the 22k mark?If so, he may be better to avoid pensions as even though he will benefit now from the tax relief, he may find that the income when paid out causes clawback of his age allowance. Does he use his S&S ISA allowance or just his cash ISA?There are lower risk investments in the former that may suit him.