final salary --state pension

kenshaz

I receive a final salary pension from my employer of apprx £15000,when I reach the age of state pension how will my final salary pension be affected,regarding deductions etc

dunstonh

Just as it is now with earned income. The only difference is that you do not pay NI on it.

If you were aged 65 now, you would earn £7,280 with no tax deducted, the next £2150 with 10% and the remainder at £22%.

With the addition of the basic state pension and any other income you may have, you may find that it takes you over the age allowance limit which is currently £20,100. You get hit, in effect, with an extra tax if that is the case which brings your personal allowance down from 7280 to 5035 (in a sliding scale depending on how far over 20,100 you are).

There are ways to avoid/reduce the impact on age allowance by utilising ISAs and Investment bonds and reducing your holdings in savings accounts and income generating investments.

EdInvestor

Isn't it a bore, tax in retirement? This is the problem with having too much of your income in pension form.People forget that the two state pensions, or the basic state pension plus contracted out pension will use up the tax allowance before you even count company pensions.

Think tax free ISAs for anything extra.