Starting a pension at 65?

Penguin6666

Hi,

My mother is due to retire in 2 months the time and has no pension. She currently works part-time earning 7k a year. My nan has left us some inheritance where we are going to club together and give her 15k towards her retirement. My questions is, it it worth putting it into a pension at this late stage?

Thanks,

MallyGirl

she can put in up to her earnings and get tax relief of 20% even though she won't have paid tax. It works on tax years so you need to get a shift on to get the £7k in before beginning of April.
Once she retires she can still pay in £2880 and get £720 added so the rest of the £15k would need to go into savings

comeandgo

I take it you mean no private pension? Take care that giving you mum this money does not deprive her of any benefits she may be entitled to. My mum has a state pension only and she manages fine with all the benefits she gets.

Penguin6666

Thank you for your response. I’m not very good with these things, so how much can she’s out of her savings in before April? And can she then with draw all of this straight away should she wish. The previous few tax years were also part time where I believe she was not taxed, if that makes a difference.?

Penguin6666

Yes, no private pension so it’s good to hear she could cope on just the state pension. Hoping my dad paid enough NI contributions before he died 30 years ago that may bump it up but very doubtful.

Thanks

p00hsticks

Penguin6666 wrote: »

Yes, no private pension so it’s good to hear she could cope on just the state pension.

Comeandgo was making the point that if you just have the state pension as income, you may also be entitled to a number of other benefits (e.g. pension credit, council tax reduction, housing benefit).

xylophone

Has your mother obtained a state pension statement?

https://www.gov.uk/check-state-pension

There is information here concerning pension credit.

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs48_pension_credit_fcs.pdf

Read this carefully before considering the pension contribution.

She could open a SIPP in this tax year, pay in £5600 and receive tax relief
of £1400 - she could pay in another £2880 on or after April 6 and receive tax relief of £720.

The personal allowance for the tax year 19/20 will be £12,500.

She could take a 25% tax free lump sum after the tax relief has been added and then set up a monthly drawdown of as much as keeps her within her personal allowance having taken account of state pension.

She would be able to contribute £2880 and receive tax relief in this way up to the age of 75.

Long thread here

https://forums.moneysavingexpert.com/discussion/5580163/paying-2880-into-pension-when-retired&page=38

Penguin6666

Thank you guys for your help.

I’ll have to take some time to read this and get my head around it all as it seems complex- for me anyway.

My mother’s state pension online estimation is £163, so I guess it’s the full amount or near enough.

Thanks, again

Pollycat

Penguin6666 wrote: »

Thank you guys for your help.

I’ll have to take some time to read this and get my head around it all as it seems complex- for me anyway.

My mother’s state pension online estimation is £163, so I guess it’s the full amount or near enough.

Thanks, again

If she will be getting this amount, she may be unlucky on the Guaranteed Pension Credit front:

Guarantee Credit tops up your weekly income if it’s below £163 (for single people) or £248.80 (for couples).

https://www.gov.uk/pension-credit
which is a pity for her as that benefit has lots of other benefits that comes with it.


Are you pretty sure that her pension will be as much as this?


I too would exercise caution before giving her any money in case it impacts on potential benefits.

Penguin6666

I’m just going if the estimate when you login to HMRC asp I assume that’s all I have to go on. Will be a shame if She doesn’t invest into her pension, in the hope that she gets pension credit and then turns out she doesn’t?

In reference to the comments above, I’m confused where the figure£2280 contribution a year comes from? Why wouldn’t it be £5600 as it is this tax year? Thanks

Pollycat

Penguin6666 wrote: »

I’m just going if the estimate when you login to HMRC asp I assume that’s all I have to go on. Will be a shame if She doesn’t invest into her pension, in the hope that she gets pension credit and then turns out she doesn’t?

In reference to the comments above, I’m confused where the figure£2280 contribution a year comes from? Why wouldn’t it be £5600 as it is this tax year? Thanks

Is this £164 a weekly amount specifically calculated for your Mum based on her contributions?
If it isn't, you need to request one.
xylophone has given the link in an earlier post.

When you know the amount of pension your Mum will get, you can then check out what benefits she may be entitled to (does your Mum own her house or rent?) and make a decision on what to do with the £15K.

I would recommend you read the pdf link that xylophone has provided that explains pension credit.

If you are still not clear, contact Age UK or your local CAB.

You say your Mum is going to retire in 2 months time, do you mean that is when her state pension becomes payable?