Where to put my Military pension

Brandnewstart79

Hi all,

I’m leaving the Military in 3 months and have landed a job for 40k a year. I have a pension for 10k a year so ideally want to put that away and a bit of my wages each month.

Looking for best options as I’m 40 yr old and don’t want to work past 55 if I’m lucky enough to achieve that.

Regards

marlot

At 50k you'll be a 40% taxpayer.


I'd recommend contributing to a personal pension. You won't be able to access it until 55 (could go up to 57 or 58) though.

Brynsam

Start a new pension with your employer - who must offer one and contribute to it (if you contribute).

Look at the 'Banking and Savings' tab at the top of this page for suggestions on where to save your £10K a year pension. Putting more of it into your new pension to take you out of higher rate tax might be worth considering, if you're prepared to tie up the cash for at least 15 years.

ex-pat_scot

Brynsam wrote: »

Start a new pension with your employer - who must offer one and contribute to it (if you contribute).

Look at the 'Banking and Savings' tab at the top of this page for suggestions on where to save your £10K a year pension. Putting more of it into your new pension to take you out of higher rate tax might be worth considering, if you're prepared to tie up the cash for at least 15 years.

Nope. The sensible place to look is here on this board.
Saving the £10,000 pa pension is best by using either deferral (if it is available) and / or contributing as much as you can and are allowed into a new pension.


If you are receiving pension already, then you need to research "MPAA" that sets limits on how much you can continue to contribute. It's certainly a lot more tax effective to do that rather than to use a bank / savings account.

NoMore

Your post is confusing, is your military pension paying you 10k a year currently or, that's what it will pay you when you choose to claim it ?

unforeseen

10k a year says it will be an immediate pension when he leaves. So tax will already be taken off at source by Equiniti who handle forces pensions.

Brandnewstart79

It will pay me every month once I leave the Military. I also have a tax free lump sum of £33k to put away also.

Merlin139

unforeseen wrote: »

10k a year says it will be an immediate pension when he leaves. So tax will already be taken off at source by Equiniti who handle forces pensions.

He can chose to have the pension paid tax free by allocating part of his Tax Allowance to his pension.

Lets say he wants to put 10.5k into his pension it will cost him 7.4k
2.1k coming from Basic rate tax relief and 1k coming from Higher rate tax relief.

Brandnewstart79 wrote: »

It will pay me every month once I leave the Military. I also have a tax free lump sum of £33k to put away also.

Have you looked at commutation? Giving up part of your pension until 55 each month for a bigger Tax Free Lump Sum? I would assume commutation has been explained to you?

If your lump sum is 33k then your pension should 11k Your lump being 3 times your annual pension.

Brandnewstart79

I have looked into commutation but we worked out that I would loose around 24k worth of pension but that was not n the basis of not paying tax on it.

So I!!!8217;ll get taxed around 20% on my pension?

Merlin139

Brandnewstart79 wrote: »

I have looked into commutation but we worked out that I would loose around 24k worth of pension but that was not n the basis of not paying tax on it.

So I!!!8217;ll get taxed around 20% on my pension?

Your Forces pension is classed as Taxable income so yes you do pay tax on it. I always used to say to people who I gave pension forecasts too was to look at the Total amount extra you could raise lets say 15k

If you could borrow 15k over the time till you are 55 so 15 years if you are 40 and borrow it cheaper than the cost of reducing your pension then do not take commutation. Obviously you would need to take into account the tax you would be liable for on the extra amount of your pension.

It all comes down to what you want to do with the money and if you want to pay extra tax on it.

Brandnewstart79

I always thought that if it!!!8217;s under my tax free allowance I!!!8217;ll not pay tax on it?

My earnings with pension will take me to 50K so I!!!8217;ll get taxed on anything over my tax free amount?