COPE Pension

QrizB

Silverbird65 said:

For 1yr.?

Every year until he's 75.

Silverbird65

He's retiring at 66 that's the end of his working life.

QrizB

Silverbird65 said:

He's retiring at 66 that's the end of his working life.

That's very nice for him, I'm sure, but has no bearing on how long he can contribute to a pension and receive tax relief.

It's quite common for retirees with no earned income to pay £2880 into a personal pension simply to make use of the free money they get in return. There's a huge thread on the subject here (you might not want to read all 121 pages).

There's no obligation to do this, of course, but for the amount of effort involved (make payment, then a few weeks later take it out again) it's probably worth it.

xylophone

He's retiring at 66 that's the end of his working life.

Working or not, it is open to people to contribute to a pension up to age 75.

It is just that if a person has no relevant earnings, he is limited in the amount he can contribute (or can be contributed on his behalf) and receive tax relief.

In such circumstances he could contribute up to £2880 (net) to a personal pension and receive up to £720 in tax relief - this would be claimed by the provider and added to his pot.

For example, suppose a person aged over 55 (no  relevant earnings or  relevant earnings under £3600) who opened a pension with a provider like HL (no charge to hold cash).  He contributes £2880 to a pension and HL claim £720 from HMRC.

When he comes to access the pension, in effect he gets a little gift from HMRC of the £720 even though he didn't pay any tax in the first place.

Let's take  a person whose only income is £12750 from a part time job.  She pays no tax.  She is fully supported by her spouse so decides that she can afford to pay her net income into a pension.

She contributes £10,200 and the provider claims tax relief of £2550 even though she has paid no tax.

Let's take a person who earns £40,000 a year. He can contribute up to £32000 to his pension and receive £8000 in tax relief.

Take a higher rate tax payer who earns £60,000 a year. He can contribute up to £32,000 to his pension and the provider will claim tax relief of up to £8000 - He then claims higher rate relief via his tax return (£1946) - the effective cost to him of the £40,000 in his pension is £30054.

Silverbird65

Thank you for explaining this to me it has been a great help. Very kind to take time. keep well.
Thanks