Worth starting a pension at sixty?

what4ver

Sixty latter this year.
Was in employment and was in a final salary scheme.
Now self employed, aim to retire at sixty five.
Higher rate taxpayer (just).
ISA allowance used each year.
Question, worth starting a private pension (or stakeholder) now? Given it will only run for five and a little bit years.

If not any other suggestions welcome.

Thanks

jamesd

Yes it can be worth it. Do you want higher income potential more than you want a higher lump sum from not having part of the money locked up in a pension after you take out the 25% tax free lump sum?

The pension option is the clear winner in income terms assuming that you'll be a basic rate tax payer when fully retired.

atush

at 40% Tax relief, yes it is worth it. Do it now. Five years of contribs, with five years of 40% tax relief will be a tidy sum.

Every ten thousand into the pension will cost you 6K. Giving you and extra 20K (without growth or dividends) at the end. Which presumably with a FS pension in the wings may be able to be accessed by DD w/o limit.

See your accountant today if you have one, otherwise see Hargreeves L, Cavendish online, or your nearest friendly IFA.

xylophone

If you will have more than £20000 guaranteed income in retirement (FS+state) it might be worth looking at a SIPP.
http://www.pilling.co.uk/Self-Invested-Personal-Pensions-(SIPPs)-Questions-Answered.htm
http://www.hl.co.uk/pensions/sipp

jamiefly

atush wrote: »

at 40% Tax relief, yes it is worth it. Do it now. Five years of contribs, with five years of 40% tax relief will be a tidy sum.

Every ten thousand into the pension will cost you 6K. Giving you and extra 20K (without growth or dividends) at the end. Which presumably with a FS pension in the wings may be able to be accessed by DD w/o limit.

See your accountant today if you have one, otherwise see Hargreeves L, Cavendish online, or your nearest friendly IFA.

He said he is only just in the 40% bracket so none of what you said above rings true.

atush

Missed the just.

But still worth it for the 10K plus in tax releif (how much plus we don't know as the OP hasn't said. But as xylo points out, if the FS (or FS plus state pension) five over 20K in income, they could get flexible drawdown.

fairleads

[Sixty latter this year.
Was in employment and was in a final salary scheme.
Now self employed, aim to retire at sixty five.
Higher rate taxpayer (just).
ISA allowance used each year.
Question, worth starting a private pension (or stakeholder) now? Given it will only run for five and a little bit years.

If not any other suggestions welcome.

Thanks]

No, its not worth the hassle and expense.
Rather save in cash and maybe purchase hall marked silver collectables ?

DavidLaGuardia

fairleads wrote: »

Question, worth starting a private pension (or stakeholder) now? Given it will only run for five and a little bit years.

If not any other suggestions welcome.

Thanks]

No, its not worth the hassle and expense.
Rather save in cash and maybe purchase hall marked silver collectables ?

Hmmm...Paying for any collectables are subject to the risk of supply and demand in the area (I have some colectables that are a sixth of their price before ebay). Also combining this with precious metals at a time of record high prices is also questionable.

Cash may have merit over such a short term, but that doesn't exclude using cash accouts via a SIPP. Then there is the question of how long the plan is actually going to be for? At retirement, a pension fund could be realistically placed in phases retirement or income drawdown over many years.

kidmugsy

Even if you pay 40% tax on only a few hundred a year it could be worth paying into a pension enough to avoid the higher rate tax. Then just before your pot reaches £2000 in total you can withdraw it all under the "stranded pots" scheme. 25% would be tax free and the balance exposed to income tax. Then you can do it a second time (but not a third).