unable to work should i take out a pension

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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hunggaurhunggaur Forumite
6 Posts
i use to work full time until i became ill 12 years ago it is highly unlikely i will ever work again due to my health.

i am 50 years of age and concerned about my future and pension provision

1) can i still take out some sort of pension
2) should i take out a pension
3) if i can and do should i put in a lump sum
4) is there any limit on how much i can put in each year as i am not working and on benifits
5) would it still get tax relief on any monies i put in

cheers

jon

Replies

  • Dazed_and_confusedDazed_and_confused Forumite
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    1) Yes
    2) Possibly
    3) Possibly
    4) Yes
    5) Yes

    Before considering a personal pension though as a first step you should look at your Personal Tax Account on gov.uk and see how much your State Pension entitlement currently is and what it might be when you get to your State Pension age.

    When checking this it is important to look for two figures, the amount already accrued (usually quoted second) and then the maximum amount you could get with additional qualifying years (normally quoted first but is often dependent on additional years being added).

    Depending on your benefits you may be getting these automatically but if not you need to consider if voluntary contributions are worthwhile. They are often seen as a good "investment" but it does depend on your own particular circumstances.
  • LintonLinton Forumite
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    If you are not working you can pay up to £2880/year into a private pension. This is increased to £3600 by HMRC who refund 20% tax into the pension even if you are a non tax-payer.


    Whether it is worthwhile depends on your tax position now and when you take your pension at 55 or later:

    - If you are a non tax payer when you take your pension you gain the £720.
    - If you are a 20% tax payer when you take your pension then the only benefit is that you can take 25% tax free. This is worth 25%X20%X£3600=£180.


    There may be some benefits implications, whiuch I cant help you with.
  • BrynsamBrynsam Forumite
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    Linton wrote: »

    Whether it is worthwhile depends on your tax position now and when you take your pension at 55 or later:

    If you are too ill to work again, you may be able to take your pension before the age of 55. Whether it would be a good idea to do so is far from clear - in particular, you need to be very sure of the impact it might have on any benefits you receive. For help, try turn2us.org.uk
  • hunggaurhunggaur Forumite
    6 Posts
    thanks for the replies

    i will currently qualify for the full state pension excluding the serps element

    i have already transferred some of my taxable allowance to my wife, i have also got a very small private pension about £25.00 month

    good point on taking my pension at 55 will have to see what the cost difference will be between now and normal retirement age

    are there any pension aimed at people in my position or is it just any personal pension
  • LintonLinton Forumite
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    hunggaur wrote: »
    thanks for the replies

    i will currently qualify for the full state pension excluding the serps element

    i have already transferred some of my taxable allowance to my wife, i have also got a very small private pension about £25.00 month

    good point on taking my pension at 55 will have to see what the cost difference will be between now and normal retirement age

    are there any pension aimed at people in my position or is it just any personal pension


    You dont need a special pension as any one that supports drawdown could be fine. You should check the charges for holding the money and for drawdown. With the relatively small drawdown you need to check any fixed charges eg some SIPPs charge £100/year for drawdown as well as ongoing annual charges for holding the investments which could be a significant % of your hoped-for gains.


    H-L have the advantage of a % based charges for holding funds and free drawdown.
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