Talking Pensions
March 11th, 2010 by
Administrator
Wherever you are with your retirement objectives, don t be swayed from considering action, it s not too late. There are however steps you can put into place to increase the pension you ll get when you retire.
Pensions are a highly tax-efficient way to invest. If you already have a pension, now would be a very good time to contact us about making a lump sum contribution to boost it, particularly as the close of tax year is quickly forthcoming, or starting a self invested personal pension to increase your options. You will not have to take 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 earnings (salary and other earnings), up to a maximum of 245,000 for the 2009/10 tax yr rising to 255,000 for the tax year 2010/11. Investments above this yearly limit are allowed but will be taxed. You can invest into any number of pension schemes (personal and/or company) each year.
You will receive 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 twenty percent.
Forty% tax payers can claim up to a further twenty percent tax relief via self assessment. 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 % for those making more than 180,000. Wage Earners below 130,000 will not be impacted.
There s a lifetime limit on the size of your pension pot, which is presently £1.75m in the tax yr 2009/10 but rises to £1.8m for the 2010/11 tax yr. If your pot passes this, you ll incur tax charges of 55 per cent if the extra gains are taken as a lump sum and 25 per cent if taken as income. The income will then be subject to income tax at your highest rate.
From 6th April 2010, the age at which you can start taking your pension increases to fifty five. If you need to, pension benefits can be postponed until you are up to 75 years old. You may still be able to take your pension prior to age fifty five in certain circumstances, e.g. if you retire through ill-health.
Consilium Asset Management offer 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.
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