Too old to start a new pension???

adepick

Hi,

I've just left HM Forces (age 45) and am lucky enough to be receiving a pension of approx £17K, which should rise to £25 when I reach 55. I've been lucky enough to find full-time work and am debating whether to join the new company's pension scheme. They will match a maximum of 4% of my current salary, and I can afford to pay another 4% as Additional Voluntary Contributions - approximately £450pm all in. I really don't want to work much beond 55 if I can, 60 at the latest. Is it worth paying into this new pension fund for a minimum of 10-15 yrs and amassing a second pot of £55-81K at today's prices, which will probably get me £3K per year when I retire? Or should I take the money, pay the tax and invest into an ISA or overpay the mortgage instead? By the way, I'm a 40% tax payer.

Any thoughts?

adepick

Lokolo

If you are a 40% tax payer, and you are getting matched contributions, then you would be pretty stupid not to do it!

adepick

Thanks.

Yes, the 4% matched contributions are a great freebie - I can see that, I'm just wandering whether it's worth all the effort for a small return in 10 years' time.....this isn't going to be my main pension.....or whether I use 'less money' to overpay bills today, like the mortgage . I like the idea of both!

CLAPTON

well you get 4% free and you only pay after tax 2.4% (60% of 4%)

no other investment can beat that.

Shiny_button

You should read about flexible drawdown. Under current rules once you have over £20k pension income... You can take the money out as you wish. 25% is tax free and the rest at your taxable rate.

adepick

Shiny_button wrote: »

You should read about flexible drawdown. Under current rules once you have over £20k pension income... You can take the money out as you wish. 25% is tax free and the rest at your taxable rate.

Wow, I like the sound of that - will look that up now! Thanks.

spitandpolish

Ok so you'll get a £25k per annum pension from your old job and you don't think an extra £3k will make much difference. Think outside the box... assume your fixed living costs are £18k so a disposable income of £7k per annum or 50% more of £10k

I know what I would do

atush

as per your other thrad, with 'free' employer's money and 40% tax relief you would be silly not to join.

and if your contribs don't bring you out of HRtax, put more of your salary in to get down to BRTax (incl income from savings). After all, you get 2 salaries, one of 17K, and one from your current job.

Fill your (and any spouse) ISA allowances in full each year as well.

adepick

spitandpolish wrote: »

Ok so you'll get a £25k per annum pension from your old job and you don't think an extra £3k will make much difference. Think outside the box... assume your fixed living costs are £18k so a disposable income of £7k per annum or 50% more of £10k

I know what I would do

Good answer. That's exactly the sort of advice I was hoping for.