20K cash pot decision

manderville

I have a cash pot of £20K that I do not need for the medium term and plan to retire in 2 or 3 years time ( Currently 63 ). Would I be better to put the £20K pot into my personal pension or to place it in the best 2 year fixed rate cash ISA?
Your views would be greatly appreciated.

xylophone

Do you have the relevant earnings to cover a net pension contribution of £20,000 after taking into account any contributions already made?



Savings rates here

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

Pension tax relief calculator

https://www.hl.co.uk/pensions/tax-relief/calculator

Dox

xylophone wrote: »

Do you have the relevant earnings to cover a net pension contribution of £20,000 after taking into account any contributions already made?

...and any tax relief already reclaimed on your behalf by your personal pension provider.

manderville

Current income £25K and this years pension contribution to date approx £2500.
If, as I read that the allowance is £40K or 100% of income, if this is lower, then I think the £20K would be OK to put in this year ?
Just wondering if the contribution year is the same as the tax year April to March ?
If so could put part in now and remainder after April 6 ?

Linton

The pension income doesnt count but in this case it doesnt matter. You are limited to a total gross contribution of £25K in the tax year but of course presumably some of that has already been used up by your contributions to your employers scheme. Note that if you wish to contribute £20K into your personal pension you actually pay in £16K and the missing £4K is paid in by HMRC as 20% tax relief on the £20K.



If you are paying for your retirement by drawdown it is very sensible to have a number of years income held as cash so that if the market crashes you can avoid selling equities at a low price.

manderville

Many thanks for your advice, much appreciated.

Mnd

And yes, if you are worried about going over your limits, split it into 2..1 payment now and one in the new financial year