Am I allowed to take out a pension?

frothy-coffee_2

Hi,
I was retired through ill health in 2006.

I receive a modest pansion £8500/annum and also incapacity benefit (means tested) and disabled living allowance.

Am I allowed (and would it be of benefit) to start up a knew pension to pay out when I'm say 65?

The main reason I ask is because of the tax breaks associated with a pension. Although I am only a lower rate tax payer.

Although it would seem counter productive at the moment because the DWP was just reduce my IB pro-rata. I do wonder whether will we still have a wellfare state in 20 years time? I'm 45 years old

Thankyou

Loughton_Monkey

Certainly, you are allowed to invest up to £2,880 (net) per year into pension, and get tax relief. It works automatically. Every £80 you pay in becomes £100 invested.

As to whether or not it is worth it, that's an impossible question. You need to understand that this is an 'investment' [and not savings] and therefore can go up and down. Historically, though, stock market investments have performed well over long periods.

Don't forget, too, that once you start one, you cannot take any of the money until age 55. Or any time after that. And when you do take it, you can have up to 25% of the value as a tax free lump sum. The remaining 75% of value will need to be used to pay an income. If you can get that tax free (because of low income) then that's all the better.

But you need to assess whether you are in (or will be in) and income bracket at which this extra pension might reduce your benefit entitlement by an equivalent amount.

Unfortunately, we would need a lot of crystal balls to foresee exactly what the pension world will be like when you retire.

frothy-coffee_2

Hi Thanks,
I would say I've only got a couple of crystal-balls but that would be rude ;-)

Seriously though,
Thankyou for your detailed answer. I will give it some thought and do some research.

Regards Frothy.