Lump sum into workplace pension.

CuttySark12

Hi Forumites.
Will shortly be inheriting a sum of circa £50k. Don't need it for immediate purposes (mortgage free, no large debts etc...) however my pension situation is pretty poor so thought this best route ? Current salary is circa £24k - Age 60. Have a workplace L&G placed pension that's been going about 8 yrs (NRD is 67) and a selection of smaller frozen pensions prior to that which amount to very little in all honesty.  Is putting a fair chunk of the £50k into the L&G now a smart move and would returns be worthwhile? Am I right in thinking cant put more than £24k in anyway due to salary level restrictions? All guidance appreciated.

Brie

Have you checked your state pension forecast in case there are some years you might top up?  Same for your spouse, should you have one.

CuttySark12

Brie said:

Have you checked your state pension forecast in case there are some years you might top up?  Same for your spouse, should you have one.

Thanks Brie - yes State Pension for me and the Mrs is up to scratch with no need for add ons.

Marcon

CuttySark12 said:

Hi Forumites.
Will shortly be inheriting a sum of circa £50k. Don't need it for immediate purposes (mortgage free, no large debts etc...) however my pension situation is pretty poor so thought this best route ? Current salary is circa £24k - Age 60. Have a workplace L&G placed pension that's been going about 8 yrs (NRD is 67) and a selection of smaller frozen pensions prior to that which amount to very little in all honesty.  Is putting a fair chunk of the £50k into the L&G now a smart move and would returns be worthwhile? Am I right in thinking cant put more than £24k in anyway due to salary level restrictions? All guidance appreciated.

You're right that you can't make gross contributions (ie including tax relief) of more than you earn, so the most you could pay in during the tax year by way of personal contributions is £19,200, which is then 'topped up' with basic rate tax relief claimed on your behalf by L&G and added to your pension pot. Employer contributions are in addition to that. You could pay in another slug of cash in the next tax year, assuming you are still earning.

The tax top up is a better 'overnight' return than you are likely to get elsewhere. In general terms, returns will depend on the underlying funds in which you choose to invest within your L&G pension 'wrapper'.

xylophone

Am I right in thinking cant put more than £24k in anyway due to salary level restrictions? 

You earn £24,000 a year. For purposes of tax relief, you are limited to a gross annual contribution of £24,000.

To determine the amount of your  contribution from inheritance, don't forget to deduct what you expect to pay per annum from salary. 

Albermarle

Have a workplace L&G placed pension that's been going about 8 yrs (NRD is 67)

Presuming this is a DC pension ( Defined Contribution ) pension where you just basically build up a pot of money, then the NRD is just a nominal figure in line with the state pension age.
You can start to take it from age 57, at any age after that or never take it all. You can take it before you actually retire or many years later.

and a selection of smaller frozen pensions prior to that which amount to very little in all honesty

It would make sense and cut down future admin if you just transferred these to the L&G pension, or to a new pension.
It might sound daunting but it is surprisingly easy to do nowadays. 5 Mins on the internet can be it.