Quick question from a Pension Numpty

CHR15

Hi,
I am about to start receiving my Pension. I have commuted a portion to give a larger lump and from what I can gather (using 2007 figures although I dont retire until 10 April) my pension will be £9431 per year.

This is a Forces Pension and I am some way off 65 yet so I am embarking on a new career if it makes any difference.

How much will I receive monthly??

Do I just use something like the online Salary Checker and put 9431 in the box??

If so I should receive £682.92 per Month or is there something else, different rules or something?

Many Thanks

jamesd

The pension will be subject to income tax but not to national insurance. Assuming that you'll have another income that will use your personal allowance that means that you can multiply the pension value by 0.8 to get its value: 7544.80 a year or 628.73 a month.

If you're not in other employment you'll get more from the pension because the 5435 personal allowance will reduce the tax on the pension. Up to 1087 a year or 90.58 a month more if you have no other taxable income.

CHR15

Thanks James.
I don't dispute your figures but it seems odd using the Slary Checker I linked to which includes both Tax and NI contributions it suggests I will take home £682.92 per month.


I do have another job so employment continues unbroken.
I will go with your figures as they are lower. Anything more will be a bonus

Thanks again

dunstonh

A salary checker is for salaries and pensions. Pension income does not have NI charged against it.

jamesd

Minie are lower because you only told the salary checker about the pension part of your income, not the whole of your income, so it added in the effect of the whole personal allowance that you're also getting in the other work, as well as charging you NI. You won't really get two personal allowances or pay NI.

You also can't use the salary checker by just adding the pension to the other income and looking at the difference, because then it would give a result that is too low because it'll deduct NI from the pension part.

You just used the tool for something it wasn't supposed to be used for.

CHR15

Thanks guys, it was the double personal allowance bit I couldn't see