additional pensions do I bother

paulrn_2

I could do with some help planning.
Background I am in receipt of my Armed Forces pension after 37 years service and have been employed outside for the past 4 years. The company I work for give me 6% of my wages as benifits and I have just been putting this into a pension (about £15K now)

I am unlikely to put enough away to buy any meaningfull annuity.
Is there any way I can get this money out of the pension fund or I have I made a mistake putting it there, I have tried to work out taking the cash and it looked like I could draw out all the cash under £18K tax free but I think that although I do not have an Armed Forces pension pot as such that this might stop that. Any advice or recomendations as to carry on or stop saving will be gratefully received. Also how to get the cash out at the best tax advantage.

dunstonh

The company I work for give me 6% of my wages as benifits and I have just been putting this into a pension (about £15K now)

Good contribution level by the company. Nothing beats free money.

Is there any way I can get this money out of the pension fund or I have I made a mistake putting it there

No you cannot get the money out of the pension and no you have not made a mistake. With a 6% employer contribution and tax relief on your own, the bulk of the fund is made up of "free money" and not what you have paid.

I have tried to work out taking the cash and it looked like I could draw out all the cash under £18K tax free but I think that although I do not have an Armed Forces pension pot as such that this might stop that.

Triviality will not apply to you.

Any advice or recomendations as to carry on or stop saving will be gratefully received.

What alternative would you use that you think would be better than the pension?

To put it in context, assuming you match the employer contribution, if the contribution each month to the pension is say £200, then you are only paying £80 of it assuming you are a basic rate taxpayer. So, the alternative would see £80 going into it compared to the pension seeing £200 going into it.

paulrn_2

Thanks for the reply, I do not add anything to the 6% it just gets paid into the fund. I know it seems daft but I cannot see the point of having a fund say of £20K when I retire as I cannot see that buying much at all, and between us we have adequate pension cover. I am begining to think I need to stop paying in and take the money as wages even though I am a higher rate tax payer otherwise it will be locked into this fund and I will not be able to afford any sort of annuity. Originally I had this vauge thought of drawing lumps of cash and using it to pay for holidays !!!!!

dunstonh

I do not add anything to the 6% it just gets paid into the fund. I know it seems daft but I cannot see the point of having a fund say of £20K when I retire as I cannot see that buying much at all, and between us we have adequate pension cover

So, on the one hand you have nothing. On the other hand you have 6% of free money. What is that worth nothing?

A fund of £20k is not much but you could make it more if you want. However, if you dont, then its still £5000 tax free and nearly a £1000 a year. Not bad for something that didnt cost you anything.

I am begining to think I need to stop paying in and take the money as wages even though I am a higher rate tax payer

So, assuming they allow that option (which they may not to considering recent rule changes forcing companies to pay into pension between now and 2017). You would pay 40% tax on it and NI. You should be looking to pay more than the 6% in and take advantage of higher rate relief whilst you still can.

xylophone

Might a SIPP suit your needs especially if you become a basic rate tax payer at some point?
http://www.harsantpensions.co.uk/pension-news.php?id=27
http://www.hl.co.uk/pensions/sipp/what-is-a-sipp