Starting a new pension when already retired?

sabu57

Firstly, apologies if this is a stupid/trivial question, or has been already discussed - I've searched but not found it.

I'm 58, retired, and in receipt of an occupational pension. We have no debt, a good mix of investments and I'm a basic rate taxpayer.

With savings interest being so low, is there any tax-efficiency in starting contributing to a new personal pension with a view to withdrawing the full sum when it approaches £10k?

Is this even possible under govt. rules? If so, what are the pros/cons, and who would be a good provider?

Thanks in advance for your help.

gadgetmind

You can put up to £2880 into a pension, which the government will gross up to £3600. You can then take out 25% tax free and pay tax on the rest. As you're a BR tax payer, the only advantage is on the tax free bit, so the gain is marginal given the effort.

atush

Yes, it is possible, although if you already have a pension you are receiving you are limited to 10K per yr contribs (instead of the normal 40K) or your total income whichever is lower.

Say you earn 5K. You can put in up to 5K (inlc TR). Earn 3K? You can put in 2880/3600 with TR (as you can even if you earn 0 so think of this for the OH?)

AS to provider, this would be based on the amt you want to invest, and the investments you wan to use. Start by looking at Cavendish online ad HL

jem16

atush wrote: »

Yes, it is possible, although if you already have a pension you are receiving you are limited to 10K per yr contribs (instead of the normal 40K) or your total income whichever is lower.

Only if it's a DC pension. If it's a DB pension the full limit of £40k is still available.

Say you earn 5K. You can put in up to 5K (inlc TR). Earn 3K? You can put in 2880/3600 with TR (as you can even if you earn 0 so think of this for the OH?)

It looks like the OP has already retired so no earned income and pension income doesn't count. So looks like the maximum would be £3600.

kidmugsy

You can contribute £2880 p.a. net, which will be made up to £3600 gross. If you eventually drew out 25% tax-free and the rest at 20% income tax tax, you'd get £3060, so your gain is £180 i.e a little over 6%. If your occupational pension is less than the income tax threshold (currently £10,600 p.a.) then you'll get a bigger advantage.

Or you could plan to keep the pension pot as a tax-efficient way to leave money to your widow; if you die before 75 she can get the lot tax-free.

atush

Not sure where or why I thought they were working pt lol. but I had it in my head

Must be the birds that woke me at 4:30am fourth day on the trot? they have raves outside my window

jem16

atush wrote: »

Must be the birds that woke me at 4:30am fourth day on the trot? they have raves outside my window

You need a scarecrow.