Starting a new pension at 60

gadgetmind

anabana wrote: »

my salary is only £12K per year but with my pension on top it comes to £18K, therefore, the contributions from me and my employer will 6.5% of £12K.

I just can't get my head around that. Do you have the actual wording they used in the job offer (or whatever) as going from £12k to £18k is a 50% pension contribution.

what I'm wondering is how do I get this back from the pension company. Is it as a lump sum and/or a pension and if it's just a pension how much would it be worth a month when I retire?

If you can clarify contributions, then it's easy to work out. However, going for whatever gets the most from the company is a "no brainer" so you could always do that and then wait for a pension illustration from the pension company.

I now know I would have been better leaving my pension sitting until I retire. But as the old saying goes needs must...

I'm not so sure. You don't have a crystal ball, and this pension income also means you can afford to make the full 6.5% contribution that gets your employer to also make the full contribution.

I hope you enjoy the work and I *know* you'll enjoy the lump sum and extra pension income later. If you can, also save a few bob each month into a cash ISA.

TrickyDicky101

OP has already her final salary pension - hence why her income is £18k and not simply her salary of £12k ;-)

gadgetmind

TrickyDicky101 wrote: »

OP has already her final salary pension - hence why her income is £18k and not simply her salary of £12k ;-)

Ah right, another Friday moment for me. I was reading as £12k with contribs taking it upwards to £18k, which was clearly mad.

I'd run a projection on this but 1) It's a Friday, 2) The Rioja is going down nicely, so all in all, I'd make a big fat mess of it.

fairleads

If I were you I wouldn't. But if you do, then only contribute from your salary. To make contributions from your pension income is, technically speaking, to convert that income into retirement capital from which you might only be able to draw an income of say 7%. So (6000x5.2%) = £312 of pension income + 20% tax rebate = £390s worth of new pension capital.
On retirement you take 25% taxfree = £97.5 leaving £292.5 new pension capital which in turn would provide an income of say 7% = £20.5. Now we invest the taxfree lump sum to receive say 6% income = £5.85. Total future income derived from the £312 of current pension income is a now reduced £26.35.

atush

Join the pension now. It is 6.5% free money from your employer. and it can grow tax free.

is that simple enough? ;-0

gadgetmind

fairleads wrote: »

If I were you I wouldn't.

I did think that the power of this particular money multiplier might overcome your deep cynicism, but it seems I was wrong.

only contribute from your salary

As it happens, I'm inclined to agree with you on this. With only a 20% tax saving on the way in, and the certainty of 20% tax on the way out, the only win is the 25% tax free lump sum, which wouldn't be enough to convince me to lock money away in a pension given how few years it will be accumulating.

fairleads

gadgetmind wrote: »

I did think that the power of this particular money multiplier might overcome your deep cynicism, but it seems I was wrong.


Cynicism? how about logic or common sense

As it happens, I'm inclined to agree with you on this. With only a 20% tax saving on the way in, and the certainty of 20% tax on the way out, the only win is the 25% tax free lump sum, which wouldn't be enough to convince me to lock money away in a pension given how few years it will be accumulating.

Glad to see that you have some of the above.
After all the timeframe is way too short to invest in equities and we haven't even factored in those ever present costs. Which in this particular instance would probably make any pension contribution from any income source practically worthless.
What is interesting however is that a dissertation similar to that provided by Dunstonh would probably earn kudos for the adviser at the annual IFA convention. This is an annual bunfight hosted by the same vested interests who both award and fund the prizes - the life insurance companies and the fund management industry.

fairleads

atush wrote: »

Join the pension now. It is 6.5% free money from your employer. and it can grow tax free.

is that simple enough? ;-0

No. Simplistic - yes (def. over simplified so as to conceal or distort difficulties)

taking_stock

it's always worth joining an employers scheme to get free money.
chances are, with an occupational scheme, there'll be no charges anyway, or at worst a fraction of a percent, which is no issue given that you're getting 6.5% free from your employer and tax relief on your own part of the contribution.

the vast majority on here are saying you should go for it ana. :-)

Lokolo

fairleads wrote: »

Glad to see that you have some of the above.
After all the timeframe is way too short to invest in equities and we haven't even factored in those ever present costs. Which in this particular instance would probably make any pension contribution from any income source practically worthless.
What is interesting however is that a dissertation similar to that provided by Dunstonh would probably earn kudos for the adviser at the annual IFA convention. This is an annual bunfight hosted by the same vested interests who both award and fund the prizes - the life insurance companies and the fund management industry.

Oh, can you only invest in equities inside a pension?