Trivial pension advice please

hethmar

Sorry to be such a dumbo with all this.

I hit 60 in March and have taken the state pension even though I am continuing to work part time for my husbands small business. I also have a personal pension with standard life which has a pot of only £6500 and they offered to give it to me as a lump sum or let it be deferred. I have let it run with just £20 a month going into it.

Now, my OH isnt brilliantly well at the mo and is thinking of folding the business in the next year or so, which means I am trying to glean as much money as poss for us both to retire on. If he were able to pay into my little pension a sum of say £9k - would he be able to claim tax relief at 20% on his company profits and yet I would still be able to get the pension in a lump sum please?

Sorry if thats confusing, hopefully someone will follow what I mean.

Annisele

I'm not a pensions expert, and hopefully one of those will be along shortly. I may be very wrong with any or all of the below, but you haven't had a response yet so I'm trying to help.

Do you have any other pensions apart from the Standard Life one (maybe a deferred pension hanging around from somewhere you worked a long time ago)? If you do, then you may not be able to commute your benefits under trivialisation rules at all - it would depend on the total value of all of your pensions.

Even if you can take your whole benefits as a 'trivial' lump sum, unfortunately only 25% of it would be tax free - so in effect you'd be paying 15% tax on the money you took out.

In any year, you can contribute 100% of your earnings or £3,600 (whichever is greater) into a pension - so as long as you're earning at least £9,000, there shouldn't be a problem with your employer paying £9,000 into your pension. I think that that would work out as your employer handing over £7,200 and the pension company sorting out the tax relief, but I'm not sure on that part - and I'm also not sure what the effect would be on his profits. Is his business set up as a sole trader, a partnership, a limited company?

What sort of pension provision does your OH have? Depending his circumstances, he might be able to look at an 'impaired life' annuity (I know that term sounds nasty, but it can result in quite a lot more cash).

It might be worth speaking to an IFA about your whole financial planning - including your pension arrangements, your OH's pension arrangements, arrangements for the sale or folding of his business etc. I think that it would be difficult to look at just your pension arrangements in isolation and decide that way what the best thing to do with £9k might be.