Final salary pension advice

Albermarle

HIA said:

This is why I've stopped work at 57. I've found out I need to pay 2 years voluntary ni contributions, roughly £1600, to get my state pension up from £171/week to full £179/week. I won't get it till 67 so gambling on living to 71 to break even. This was a surprise as I've been working public sector and paying ni for 37 years so I didn't expect to be short.

 

Paying to top up the state pension to the maximum is probably the best investment you will ever make .
It is approx £800 to buy over £200 pa extra pension , index linked etc . To buy £200 pa guaranteed income on the open market in the form of an annuity would cost up to £10K

Silvertabby

Albermarle said:

HIA said:

This is why I've stopped work at 57. I've found out I need to pay 2 years voluntary ni contributions, roughly £1600, to get my state pension up from £171/week to full £179/week. I won't get it till 67 so gambling on living to 71 to break even. This was a surprise as I've been working public sector and paying ni for 37 years so I didn't expect to be short.

 

Paying to top up the state pension to the maximum is probably the best investment you will ever make .
It is approx £800 to buy over £200 pa extra pension , index linked etc . To buy £200 pa guaranteed income on the open market in the form of an annuity would cost up to £10K

It really is a no-brainer.  I'm paying for 4 years - 2 down, 2 to go.  The fourth year will only buy me about £4.80 instead of the full £5.13, but it's still worth doing.

HIA

I have read the article on sipps and am confused, I have no income but if I pay in £2880/year from savings how does this become £3600 and how and when can I access it?

Dazed_and_C0nfused

It becomes £3,600 because you will receive basic rate tax relief of £720 (£3,600 x 20%).

You don't need to be paying any tax to get the tax relief but as you aren't earning anything you are limited to contributing £3,600 (inclusive of tax relief).

You can access it from age 55 however once you take any taxable income (other than buying an annuity) you are forever limited to maximum contributions of £4,000 per tax year.  Which would only be an issue if you got a job (or became self employed) and wanted to contribute more than £3,600.

HIA

Thanks, went with wealthify sipp because I already had an ISA with them, very easy and tax added within an hour.