osark:
Pension systems work as long as the generation currently contributing is doing it in a larger amount than the generation drawing it down.
Its all a pyramid scheme, literally. And the demographic pyramid doesnt look too good to maintain such a system much longer. Hence work pension schemes became law, so to push the responsibility or outrage when it fails, away from the state and into wall street and the city of london. Plus the always increasing retirement age.
In that environment the state pension is effectively just a tax on earnings which could be better invested elsewhere ( like paying down a larger mortgage on a more valuable property sooner ).
While private pensions are at least optional not compulsory.
But in all cases pensions are actually sold on the lie that your contributions are for your own pension not to pay someone else’s.
Let alone to adding to the massive profits of the banking sector using bent life expectancy figures to keep hold of the pot.
stu675:
mac12:
I’ve been checking another pension and it’s got £64300 in it and they say it will pay £433
9 from the age of 65 for life so still going to be well into my 80s before being in profit
£64,300 is only £45,000 after tax if you cash it in. So it will pay for itself in 10 years, i.e. live passed your 75th birthday.
Alternatively, you don’t have to turn it into that £4339 annuity, just put it into drawdown and you can take what you like out of it only paying income tax after the first 25%
That’s assuming he has done no other work as as soon as he hits the 40% threshold at £50270 any thing over that is 40% but the 1st 25% of the pension is tax free. Some pension companies but not all will automatically deduct 40% tax leaving you to deal with HMRC for the rebate
chester1:
stu675:
mac12:
I’ve been checking another pension and it’s got £64300 in it and they say it will pay £433
9 from the age of 65 for life so still going to be well into my 80s before being in profit
£64,300 is only £45,000 after tax if you cash it in. So it will pay for itself in 10 years, i.e. live passed your 75th birthday.
Alternatively, you don’t have to turn it into that £4339 annuity, just put it into drawdown and you can take what you like out of it only paying income tax after the first 25%
That’s assuming he has done no other work as as soon as he hits the 40% threshold at £50270 any thing over that is 40% but the 1st 25% of the pension is tax free. Some pension companies but not all will automatically deduct 40% tax leaving you to deal with HMRC for the rebate
Firstly a drawdown pot can go down as well as up.
While compromising mortgage payments to make pension contributions can only result in higher compound interest to pay on the motgage.Therefore less budget to pay for a better house which will also generally perform better than the pension over the term and that growth isn’t taxable if/when you decide to liquidate it in whatever way.
The pot can also go down when you’ve started drawing it.
Any income above your tax allowance is taxable including when combined with the state pension.
The 4k won’t be worth the same at age 70+ that it was at age 65.
You could also die before age 75 based on good old fashioned 3 score years and 10 anything more is a bonus reckoning.
This was in today’s Daily Fail - msn.com/en-gb/money/other/a … yakL?ocid=
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Withdraw the pot in full
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Take up to 25 per cent tax free and buy an annuity with the rest
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Take up to 25 per cent tax free and leave the rest in ‘flexi-access’ drawdown
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Take your pension in a series of lump sums, with each withdrawal partly taxed and partly tax free