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    • LindA.
    • By LindA. 17th Apr 18, 5:41 PM
    • 3Posts
    • 0Thanks
    LindA.
    Pension or savings confusion (help!!)
    • #1
    • 17th Apr 18, 5:41 PM
    Pension or savings confusion (help!!) 17th Apr 18 at 5:41 PM
    Hi, I am 55 I have two small pension funds. I also have a sum of money to invest. Do I save or add to a pension fund??
    I am really worried about my financial future. I pay very little into the Peoples Pension at present, I am a seasonal worker, I do normally have a regular fairly good income. My mortgage is paid.
    I am going to get some advice from Citizens Advice Bureau in the future.
    Does any one have any ideas? - I am thinking to the future and can't see myself surviving on the funds I will have.
Page 1
    • xylophone
    • By xylophone 17th Apr 18, 7:15 PM
    • 25,371 Posts
    • 14,967 Thanks
    xylophone
    • #2
    • 17th Apr 18, 7:15 PM
    • #2
    • 17th Apr 18, 7:15 PM
    Have you checked your state pension position?

    https://www.gov.uk/check-state-pension

    Had you thought of increasing your contributions to the People's Pension?

    https://thepeoplespension.co.uk/employees/your-member-information/putting-your-money-into-the-peoples-pension/
    • AnotherJoe
    • By AnotherJoe 17th Apr 18, 8:07 PM
    • 9,367 Posts
    • 10,325 Thanks
    AnotherJoe
    • #3
    • 17th Apr 18, 8:07 PM
    • #3
    • 17th Apr 18, 8:07 PM
    At age 55, a pension is equivalent to saving, since you can get the money out again when you want. Even worse case, if you put it in and get the tax uplift and then pay tax on it on the way out, you still gain because 25% of the withdrawal is tax free.

    Example, you put 800 into savings and a pension at the same time.
    The pension gets bumped up to 1000. The savings stays at 800.

    One year later take the 800 out of savings. No tax, you've got 800. No gain.
    Take the 1,000 out of pension. 250 is tax free. Pay at most* 20% tax on the 750 leaving you 600, add the 250, you've just magically made 50. (If no tax is due, you've made 200)
    That is on each 1,000 you "save" into a pension. Note, you cant put in more than you earn.


    * This assumes you are a 20% tax rate payer.
    • adindas
    • By adindas 17th Apr 18, 8:19 PM
    • 3,528 Posts
    • 2,192 Thanks
    adindas
    • #4
    • 17th Apr 18, 8:19 PM
    • #4
    • 17th Apr 18, 8:19 PM
    At age 55, a pension is equivalent to saving, since you can get the money out again when you want. Even worse case, if you put it in and get the tax uplift and then pay tax on it on the way out, you still gain because 25% of the withdrawal is tax free.

    Example, you put 800 into savings and a pension at the same time.
    The pension gets bumped up to 1000. The savings stays at 800.

    One year later take the 800 out of savings. No tax, you've got 800. No gain.
    Take the 1,000 out of pension. 250 is tax free. Pay at most* 20% tax on the 750 leaving you 600, add the 250, you've just magically made 50. (If no tax is due, you've made 200)
    That is on each 1,000 you "save" into a pension. Note, you cant put in more than you earn.


    * This assumes you are a 20% tax rate payer.
    Originally posted by AnotherJoe
    Is the 25% tax free allowance is for each withdrawal irrespectively how many withdrawals made in a year or there is a limit for it ??
    Last edited by adindas; 17-04-2018 at 8:23 PM.
    • AnotherJoe
    • By AnotherJoe 17th Apr 18, 9:10 PM
    • 9,367 Posts
    • 10,325 Thanks
    AnotherJoe
    • #5
    • 17th Apr 18, 9:10 PM
    • #5
    • 17th Apr 18, 9:10 PM
    No limits as far as HMRC. Pension companies may have limits on the number just for admin reasons. Would you want to do more than one a month for example?
    • adindas
    • By adindas 17th Apr 18, 11:12 PM
    • 3,528 Posts
    • 2,192 Thanks
    adindas
    • #6
    • 17th Apr 18, 11:12 PM
    • #6
    • 17th Apr 18, 11:12 PM
    No limits as far as HMRC. Pension companies may have limits on the number just for admin reasons. Would you want to do more than one a month for example?
    Originally posted by AnotherJoe
    Yep that is what I was asking if it is allowed. But thanks I got the answer already.
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