Pensions Made Easy
SUE’S GUIDE
Is there ever a right time to talk about pensions? If you don’t know where to start, here’s my guide to debunking the jargon with the five questions I’m always asked.
What is a pension?
It’s a way of putting money aside for retirement. The bonus of pensions over other savings is that the Government chips in, in the form of tax relief, and with work pension schemes, your boss should pay in too.
When can I get at my pension pot?
With your state pension, you can’t get your hands on it until state retirement age. Check yours at WW.GOV.UK/STATE-PENSION-AGE With private pensions, ones you’ve started yourself or had through work, it’s age 55.
Is it tax free?
With private pensions you can take 25% of your pot tax free. You may have to pay tax on the rest, as you withdraw it. This depends on your annual income. If it’s under £12,570, known as your tax free allowance, you won’t pay tax.
Should I lump all my pensions in one pot?
Lots of us have pension pots dotted around from past jobs. It can make sense to lump them together, but there’s no one size fits all, so check the rules of each scheme, and any costs first.
Where can I get help?
You can pay a financial advisor for advice, but it’s not cheap, typically around £150 an hour. However, you can get free guidance from the Government’s Pension Wise service. They won’t tell you what you do, but they will explain what your options are.