Pension at 40 where do I start!!!

greencode

Yes, I realise I've been stupid and left it way too late but just wondering where I start?

I have savings in ISA's and various bank accounts of around £150,000 so could I start a pension with a lump sum of that money?

If that's possible where do I start and how much would you advise to add as a lump sum and then continuing on a monthly basis?

xylophone

Are you employed/self employed?

redmalc

You have wasted the free gift of tax from the Goverment,I am not sure what the limit is per year you can invest but get the money in your pension.
I am currently paying into mine 35K per year because I have had a pension for thirty years but I only paid in 160 per month until recently and have now built up a pot of 440 K,I am 61 and will finish work in two years time

greencode

xylophone wrote: »

Are you employed/self employed?

I'm the owner/director of my business with just me employed.

Dazed_and_confused

It may be better if you didn't start making pension contributions.

This is probably a question you need to be talking to your accountant about.

LXdaddy

greencode wrote: »

I'm the owner/director of my business with just me employed.

Then you should speak to your accountant because your company should be making pension contributions for your benefit.

Otherwise the amount you can contribute to a pension is limited to the smaller of £40K or your earned income. So you are not going to get your £150K lump sum into a pension scheme immediately.

(PS - you might want to consider why your accountant hadn't suggest your company setting up a pension scheme)

E2A - Dazed types quicker than me

xylophone

http://www.kirkrice.co.uk/blog/company-director-pension-payments/

justme111

Not sure it would be benefitial to move money from an ISA from which you can remove it untaxed to pension which will be taxed when you take it from there.

Aretnap

justme111 wrote: »

Not sure it would be benefitial to move money from an ISA from which you can remove it untaxed to pension which will be taxed when you take it from there.

Because moving it to a pension will attract tax relief, which will likely more than cancel out the tax payable on withdrawing it from the pension due to the 25% tax free lump sum, and probably a lower marginal tax rate in retirement/opportunity to make full use of the personal allowance etc.

This is subject to some uncertainty of course as tax rates may change over the next 20 years or the tax free lump sum may become less generous, but assuming things stay more or less as they are there is a clear benefit to holding it in a pension rather than an ISA.

dunstonh

Company directors should be looking to pay using company contributions as a) there is no limit based on salary (you can go the whole £40k) and b) you get money out of the company tax free and the company reduces its CT bill.

By making personal contributions you have paid 20% corporation tax on the profit and then have dividend tax of 7.5% (assuming basic rate band). 32.5% if higher rate. Pensions from company contributions are a no brainer which is why most directors will be encouraged to use pensions by their IFA and accountant.