Are pensions available where you do not need to make minimum monthly contributions?

kc2

Hello

I worked for a company for 17 months and recently left.

Over that time I made contributions into a company pension scheme, the pension has a value of approximately 9k.

As I left the company within two years my only option is to transfer out the pension or the value will be lost.

I tried to find out if I could transfer to the pension scheme of my new employer but they said I need to be paying in for at least two years to allow transfers in.

So, now I am looking for a pension for which I can transfer in the 9k.

All of the pensions I have looked at so far require minimum monthly payments to be made. I'd rather not make these payments as I already make contributes via my new employer's scheme.

Are pensions available where you do not need to make minimum monthly contributions?

If the answer is no, and I have to make minimum payments (not ideal), do I just inform my new employer and they make the payments? Or do I make cash contributions and the fund will gross it up by my marginal tax rate?

Thanks
kc2

jem16

kc2 wrote: »

Are pensions available where you do not need to make minimum monthly contributions?

Stakeholder pensions should certainly allow this.

If the answer is no, and I have to make minimum payments (not ideal), do I just inform my new employer and they make the payments?

Very unlikely. Your employer would normally only contribute to its own scheme.

Or do I make cash contributions and the fund will gross it up by my marginal tax rate?

Yes you can do this.

kc2

Thank you.

I could not find a pension which does not have minimum payments with a transfer in of less than 10k.

However, I have found a pension by standard life where the minimum payment is £20 per month.

Unfortunately, this creates another issue, I am a higher rate tax payer and I have not completed a tax return before.

Various websites seem to suggest that completing a return is the only way I can get back the extra tax paid.

As an example I pay in 20*12 = 240 for the year, the fund will gross up to 240/0.8 = 300. I think I need to get back 240/0.6-300 = 100 from the tax man.

I would rather not complete a tax return (it looks like a long process), and was just wondering if anyone on here knew if there is some other way to claim this tax back?

dunstonh

I could not find a pension which does not have minimum payments with a transfer in of less than 10k.

i would think it harder to find one that has a 10k minimum. I am aware of a few but not many.

Various websites seem to suggest that completing a return is the only way I can get back the extra tax paid.

They are wrong. It does not require a tax return. You just need to notify HMRC. Letter is simple enough.

The internet is full of BS. For all you know I could be telling you BS as well. Except I am not.

jem16

kc2 wrote: »

Various websites seem to suggest that completing a return is the only way I can get back the extra tax paid.

A tax return is one way but if you do not already complete one, HMRC will not put you on self assessment just for that. A simple phone call or perhaps a letter will suffice. They will then adjust your tax code and you'll get the extra tax relief that way.

As an example I pay in 20*12 = 240 for the year, the fund will gross up to 240/0.8 = 300. I think I need to get back 240/0.6-300 = 100 from the tax man.

By the way you're calculating the tax relief wrongly. As you worked out the £240 is grossed up to £300 by the pension provider. You then tell HMRC that you have made a gross contribution of £300 and they will then give you the other 20% tax relief on that £300 which is £60. So your £300 contribution has cost you £180.

kc2

jem16 wrote: »

By the way you're calculating the tax relief wrongly. As you worked out the £240 is grossed up to £300 by the pension provider. You then tell HMRC that you have made a gross contribution of £300 and they will then give you the other 20% tax relief on that £300 which is £60. So your £300 contribution has cost you £180.

That makes much more sense. Thanks :T

agrinnall

Completing a tax return is really not a very onerous task if your affairs are relatively straightforward - e.g. 1 PAYE job, a few savings accounts, a few shares, and pension contributions. Once you have gathered together all the figures it's quite simple to complete the forms online. I do it so I can be pretty sure each year that my tax is up to date - sometimes I have a bit extra to pay, sometimes I get a refund, but I can be reasonably confident that I won't be chased by HMRC some years down the line.

jem16

agrinnall wrote: »

Completing a tax return is really not a very onerous task if your affairs are relatively straightforward - e.g. 1 PAYE job, a few savings accounts, a few shares, and pension contributions. Once you have gathered together all the figures it's quite simple to complete the forms online. I do it so I can be pretty sure each year that my tax is up to date - sometimes I have a bit extra to pay, sometimes I get a refund, but I can be reasonably confident that I won't be chased by HMRC some years down the line.

I do the same.

Just got my time to complete a tax return letter today. Inside there is also a leaflet about whether or not you need to complete a tax return. As I can answer No to all of the questions I probably don't need to but I will continue to do so just to make sure each year is correct.