Advice Please

paulrn_2

Background. I am 59 and have a pension in payment from the Armed Forces, which I left in 2008. I have been working for a company which put 6% of my wages in a pension pot which is now worth 17K. They are now offering me the opportunity to put 0% of my money into this pot with them contributing 1% and to take an extra 6% in wages (which will be taxed at 40%) or carry on putting 6% of my wages into the pot at no cost to me.

If work continues well I guess there will be £30-£35K in the pot when I retire. I know I can draw 25% of this Tax free but what the hell would I do with the little left.

Would it be better to take the money now, draw 25% of the £17K at retirement and do god knows what with the little bit left or carry on for 5 years.

I cannot treat this as a small pension pot because of the Armed Forces pension.

Many thanks for your time

OldBeanz

If your Navy pension is over £20k (approx £15k if you want to wait until your SP)you will likely be able to use Flexible Drawdown. So you can pay in with 40% tax relief, then on retiral take 25% tax free and the rest as you wish although it makes sense to keep your total pension income in the 20% bracket. This is a very tax efficient means of boosting retirement income.

paulrn_2

Many thanks for that, I will investigate if my scheme operates FD, seems like a good way of taking my employers money into the pot and then just paying basic tax on it as I take it out for holidays etc.

xylophone

If you will have more than £20000 of secure income at retirement, I wonder would it be worth transferring your company pension to a SiPP and have your company contribute to it while you contribute the 6%?

http://www.thepensionadviser.co.uk/articles/36/flexible-drawdown/
http://www.hl.co.uk/pensions/sipp/transfer-to-the-vantage-sipp
http://www.hmrc.gov.uk/pensionschemes/tax-basics.htm#1