Pension: Never Too Late to Start!

If you are older and think you have left pension planning too late the answer may surprise you. Due to generous tax breaks from the government it is still worthwhile using a pension to increase your retirement income - even if you retire the day after you move your money - as the following example shows:

£10,000 in a building society at say 5% = £500 per annum**

For a basic rate taxpayer £10,000 in a pension becomes £12,500 due to tax relief.

At 65 take an annuity income for life @ 6.6%* (on the £12,500) = £825** - that’s 65% more income.

For a higher rate taxpayer £10,000 becomes £16,667 due to tax relief.

At 65 take an annuity income for life @ 6.6%* (on the £16,667) = £1,100.02** that’s 110% more income!

Now of course if the money is in the building society you can still access your capital - but then you’d lose your income - so a balanced approach is probably wise…

*Single life, level, 10 year guarantee

** Income is potentially taxable in both cases

NB you can get a 6.6% annuity today - more if you are ill or a smoke – you’d be hard pressed to get 5% on deposit rates! Contact Us for fully qualified independent financial advice everyone can follow...in Wye near Ashford and Canterbury in Kent.