How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Rakhi Vasavada Your Own Question
Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4545
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
43581946
Type Your Finance Question Here...
Rakhi Vasavada is online now

I left the NHS pension early at 54 due to personal and urgent

Resolved Question:

I left the NHS pension early at 54 due to personal and urgent financial reasons. I am now in receipt of £680 per month, having spent the lump sum.

I work full time as a senior lecturer and pay £431.89 into the teacher's pension scheme. My wages and pension bring my annual gross salary up to £55,272, therefore I pay higher rate tax on some of it. I am thinking of paying extra into the teacher's scheme to recoup some of the losses of having to take NHS pension early and because I won't be in this scheme for long. Aim to retire at 65.

The teachers scheme offer 2 things- 1. paying AVCs into the prudential or making extra contributions in to their scheme. I have no idea which is better. Also, will paying into the teacher's scheme affect my NHS pension or vice versa when I eventually do retire?? And how much money do I need to put into my pension to get out of the higher tax bracket,

thanks,

Angie
Submitted: 3 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 3 years ago.
Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

In my opinion, paying AVC into the prudential would be a better option and greater flexibility especially when you are currently in higher tax bracket.

Paying AVCs are tax efficient qualify for tax relief like other pension contributions do. Subject to HM Revenue & Customs (HMRC) limits, each £100 you invest into your pension will only cost you £80 (as a basic rate taxpayer), as the remaining £20 that you would normally pay to the taxman will be paid into your pension as tax relief instead. This will be higher if you are a higher/additional rate tax payer.

Having said this, apart from the above, all AVCs are aimed at boosing your retirement income. AVC Plans aims to increase your retirement income and sit alongside any company pension scheme you may have. You can also take a tax free cash lump sum, just like other pensions.

You can consider putting some 10-15% more of your money to come out of the higher tax bracket.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards
Rakhi Vasavada and other Finance Specialists are ready to help you