Barrister:
How much can I pay into my pension scheme?
When you come to retire you have no business to sell to help fund your retirement, which means that you need to plan your retirement strategy.
The establishment of a sizeable pension fund will no doubt form a major part of your strategy. We strongly recommend to our clients that they make contributions to a pension scheme from as early as possible in their career. If not, it just gets more expensive!
You are entitled to make qualifying contributions of up to £3,600 per annum (before basic rate tax relief at source) into your personal pension scheme without needing to have any earnings. Above this level, in order for the contributions to qualify for tax relief you can pay up to the lower of 100% of your earnings in the tax year, or the 'Annual Allowance', in order for the contributions to qualify for tax relief. Payments of more than the annual allowance will attract a tax charge of 40%. The Annual Allowance levels have been set by the Chancellor of the Exchequer for the next 5 years. These are:
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There is also, however, a 'Lifetime Allowance'. This is the maximum total fund value allowable that still attracts the favourable tax benefits. If your fund is greater than the Lifetime Allowance when your benefits are crystallised, a tax charge of 55% is applied to the surplus, which you can then take as a lump sum. Alternatively you can pay a 25% tax charge and use the remaining surplus to provide an income. The Lifetime Allowances have also been set for the next 5 years. These are:
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We will explain to you the planning opportunities available for making pension payments for non-working spouses and children and the interaction of tax relief between personal pensions and retirement annuities for tax relief.
One size does not fit all in pension planning. One of our strengths is that we investigate and monitor the whole range of pension policies available to advise you of the best one for you.
Your interests may be best served by setting up a self-invested personal pension (SIPP). We will advise you of the benefits and drawbacks of this form of scheme.
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- Personal pensions
- Stakeholder pensions
- Self-Invested Personal Pension (SIPP)
- When will I be able to afford to retire?
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Where next?
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Within Barrister…
General…
