752Pension Advice
posted on March 8th, 2010
Wherever you are with your retirement savings, do not be put off from considering action, it s not too late. There are however steps you can take to boost the pension amount you ll get when you retire.
Pensions are a very tax-efficient way to save. If you already have a pension, now would be a good time to contact us about making a lump sum contribution to improve it, particularly as the close of tax yr is speedily nearing, or starting a SIPP to improve your choices. You won t have to draw all your pensions at the same time.
If you are employed, you can contribute up to 100 per cent of the value of your applicable UK salary (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax yr rising to 255,000 for the tax yr 2010/11. Contributions above this yearly amount are granted but will be taxed. You can contribute into any no. of pension schemes (personal and/or company) each year.
You will obtain tax relief on your Investment, so if you are a forty % tax payer a 20,000 investment would cost just 12,000. Basic rate tax relief is supplied by the government to all contributions at a rate of 20%.
Forty percent tax payers can obtain up to a further twenty percent tax relief via their tax return. If you earn more than 150,000 you will see the tax relief on your pensions cut from April 2011, tapering from 40 to 20 percent for those making more than 180,000. Earners beneath 130,000 will not be impacted.
There s a lifetime limit on the amount of your pension pot, which is presently £1.75m in the tax year 2009/10 but rises to £1.8m for the 2010/11 tax yr. If your fund passes this, you ll incur tax charges of 55 % if the surplus benefits are taken as a lump sum and 25 percent if taken as income. The income will then be subject to income tax at your highest rate.
From 6/4/10, the age at which you can start taking your pension rises to 55. If you need to, pension benefits can be deferred until you are up to 75 yrs old. You may still be able to take your pension prior to age 55 in certain circumstances, for example if you retire through ill-health.
Consilium Asset Management Ltd provide pension advice and retirement planning advice.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.
