Pension top up?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
3 replies 964 views
knuckledraggerknuckledragger Forumite
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Knowing I have access to the collective intellect of this site, a friend of mine asked me whether she should top up her pension:
She has a private pension with the Pearl (don't start me off) and is due to retire in February (age 60). As a percentage of her slary, she hasn't paid an awful lot into her fund. She recently came into some money.

She is without mortgage and could easily afford to pay several thousand pounds into her fund without making great inroads into her savings.

Would this be worth her while, would the government top up any contributions she made? Would she still be able to take 25% of the fund as a tax free lump sum in February?
...and then the window licker said to me...

Replies

  • dunstonhdunstonh Forumite
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    ARRRGHHH PEARL.

    First of all, Pearl are thankfully closed for new business so she cannot top up their plans.

    She could make single premium contributions (even when not working). Whether it is beneficial depends on her circumstances. The annuity income based on the net single premium can be more attractive than the return on a savings.

    If the additional income from the contribution isnt needed now, it can make sense to leave them for a few years. Get some growth and with increased age comes the increased annuity rates.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • knuckledraggerknuckledragger Forumite
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    Thanks DD, I'll put this to her.
    BTW, she was with the Pearl long before I ever knew her and only just told me she was with them a couple of months ago. Not enough time to switch and make any real kind of difference.
    As an aside, Would an open market option be the route for her rather than getting an annuity from Pearl? I base my question on their apparent uslessness at just about everything financial. She has yet to receive their offer.
    ...and then the window licker said to me...
  • dunstonhdunstonh Forumite
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    open market option is available on their personal pensions and transfer on their retirement annuity contracts.

    None of the Pearl personal pensions have guaranteed annuity rates but the some of the retirement annuity contracts do. Pearl recently arranged for Pru to take all the annuity business and pearl quotes should in theory match the Pru. However, Pru open market option rates seem to come in a little higher.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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