How does private pension affect state pension?

dukeofrochdale

Im about to take out a private stakeholder pension, im 35 and this will be my first pension, paying in around 200-250 per month.

Im wondering what affect having a private pension will have on the entitlement to state pension?

Is the state pension affected by other income you have when you retire (i.e a private pension) ?

Thanks for any advice

Steve

Ian_W

Im wondering what affect having a private pension will have on the entitlement to state pension?

None in respect of basic state pension.

Is the state pension affected by other income you have when you retire (i.e a private pension) ?

Nope.

You should however read THIS THREAD as there is a balanced argument for ISAs v pensions if you don't receive any employer contributions and are a basic rate taxpayer. Long thread but plenty of useful info. Having too much pension income can lose you tax allowances.

ManAtHome

One thing you can guarantee is that the rules will change over the next 30 odd years. Good idea to be thinking about saving instead of blowing the lot though - good luck.

sparrer

a private pension has no effect on the state pension but you may have to pay tax on the private one. I don't get the full state pension, and have a very meagre private pension but I pay tax because I'm just over the threshold of what the government thinks I should be able to live on. If you're only 35 now it may be that there won't be such a thing as a state pension when you reach retirement age, if the scaremongers are to be believed, so sift away all you can.

seven-day-weekend

You pay tax on any amount over your personal allowance, whatever the source of the income.

dukeofrochdale

Thanks for all your advice, seems like the futures a complete unknown so i might as well just go for it and see what happens.

Cheers

margaretclare

No. Other pensions have no effect on the basic state pension whatever. All the pensions, from whatever source, are added together and set against the personal tax allowance, which depends on your age - it's higher for age 65-74 and then higher again for 75+.

For example, DH has basic state pension, the same amount again SERPS (what's now called S2P) and a monthly annuity. As the tax allowances are going up again in April that means he'll barely be paying any tax at all (he's 73). I get state pension, some SERPS, some private and some I got from the NHS. I won't be paying much tax after April either.

Whatever, I'm jolly glad we do have extra pensions and we don't have to claim means-tested benefits. It's well worth saving extra, however you choose to do it.

HTH

Margaret