Small pension tax free?

kidmugsy

amandajc wrote: »

Up until this week I was concentrating on feeding my S&S ISA … and maybe set up a personal pension to help.

It may now be time to remove money from the ISA and plunge it into a personal pension of some sort. If you get a shift on you could still squeeze in a 2013-14 contribution. For 2014-15 I might be tempted in your shoes to wait for the legislation to pass.

amandajc

Thanks kidsmugsy, but, and I'm probably being a bit dense here, why would I particularly benefit from getting some extra money into a pension this tax year? I am a standard rate tax payer so I thought that I would get tax relief on whatever I put into a personal pension, whenever I put it in?

Also, I was thinking of setting up a pension and paying in £300 or so a month instead of putting all my spare cash into my Isa as I am currently doing. Do you think that would be a sensible thing to start as soon as possible ,or is there a chance that the legislation might not actually get passed as expected?

I wouldn't want to take a risk if there were a doubt as to how things will look on paper next year as I can't afford to have any more money tied up till I'm 66. The critical thing for me is to be able to stop work when my husband retires and and defer taking my LGPS pension for as long as possible (I would lose 27% if I took it at 60).

OldBeanz

atush wrote: »

Sorry but the main change to womens State pensions was decided many years ago now (nearly 20)? It came as no surprise to anyone who is literate.

My wife has three DB pensions. 1 will pay out at 60 @ £3k and the other 2 at 66 @ £2.5k and £.5k. She also had £20k in a stakeholder accumulated when she was not earning (it could have been paid into the larger DB pension to be paid at 66). There has been no practical way to fund the gap (between 60 and 66) of not using her full allowance other than funding it by my flexible pension and ISAs. As I am 7 years older than her I wanted her to retire when we could still do things together, not when I was 73. The stakeholder pension was largely seen as redundant until now (£5k lump sum and £750pa). This is the issue that a number of others have highlighted because while pensions are now paid out at the same age, couples are rarely the same age.

OldBeanz

amandajc wrote: »

Thanks kidsmugsy, but, and I'm probably being a bit dense here, why would I particularly benefit from getting some extra money into a pension this tax year? I am a standard rate tax payer so I thought that I would get tax relief on whatever I put into a personal pension, whenever I put it in?

Also, I was thinking of setting up a pension and paying in £300 or so a month instead of putting all my spare cash into my Isa as I am currently doing. Do you think that would be a sensible thing to start as soon as possible ,or is there a chance that the legislation might not actually get passed as expected?

I wouldn't want to take a risk if there were a doubt as to how things will look on paper next year as I can't afford to have any more money tied up till I'm 66. The critical thing for me is to be able to stop work when my husband retires and and defer taking my LGPS pension for as long as possible (I would lose 27% if I took it at 60).

You appear to be trying to fill the same gap as I am talking about above.
Labour have now come out and supported in principle Osborne's proposals and O has a majority in parliament so the risk of these proposals not becoming law is minimal (defeat of the Chancellor would normally bring down a parliament)
For pensions you are limited to the amount you can pay in during the year. The maximum is £50k going down to £40k next fy or 100% of your wages or £3600 if you have no income. You have to exclude the payments made by your employer to your pension and the payments you have made but that will be on your LG payslip. The rest you can pay into a PP, Stakeholder or SIPP using your money but your husband can give you this money. If you want to take advantage of this year's allowance you need to do it before the 5th of April. £300 pcm suggests you should be well within any constraints mentioned assuming you earn over £9k allowing for your LGPS payments.

amandajc

Thanks Oldbeanz. That's very useful and reassuring. I am well within the limits (standard rate tax payer able to make modest payments). This change in legislation looks like it will make a real difference to me as I also have a FSAVC which should be worth about £24,000 when I'm 60. It was going to be giving me around £480 per annum (after the 25% lump sum) which is not the best use I have for it. However now it can be accessed as cash over the 6 years it will be much more valuable.

You make a good point about age differences between married couples for those of us lucky enough to still be on DB pensions. My husband could take his pension at 60 and is currently in flexible retirement working 20 hours a week which does works well for us but I won't be able to do the same. Saving hard into a PP of some kind (along with S&S ISAs) seems the best way to ensure we get to enjoy some retirement together. I wish you well with the same.