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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am 57 and pay into a Civil service pension at my work

Resolved Question:

I am 57 and pay into a Civil service pension at my work under the old 'classic scheme'
I will be eligible for a state pension at the age of 66Am I allowed to start an additional private pension (maybe investment) whilst keeping my own employment pension going ?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

You most certainly are and you will receive tax relief on your contributions by paying premiums net whilst you provider claims the tax at the basic rate from HMRC. You should be aware of the following two points. Firstly the aggregate of your and any contribution made by your employer should not to exceed 40K in the current tax year. Secondly you should be careful not to allow your pension pot to exceed 1.25m. Failure to adhere to these limits can have heavy tax consequences.

I do hope that you have found my reply of assistance.

Customer: replied 1 year ago.
Thank you , I was hoping to start a small separate pension to keep my gross salary down ,but with the flexibility that I could stop payments if my situation changes. I realise that this may not be the most efficient return for a separate pension but I hope (even if I break even) on contributions that my intended short term reduction in disposable income (for other reasons) will be of benefit.
Expert:  bigduckontax replied 1 year ago.

Have you considered the possibility of making Additional Voluntary Contributions (AVCs) into your CS pension scheme?

Some pensions providers will allow erratic contributions to their schemes, but you will have to shop around.

Please be so kind as to rate me before you leave the just Answer site.

Customer: replied 1 year ago.
Thank you, ***** ***** been paying voluntary into my pension £100 per month and also lump sums and after £4400 paid in this way realised how small the difference that made. I understand that this was 'added pension contributions' rather than AVCs and apparently there is a difference ?
I was musing that an additional private pension in addition to an occupational pension could attract 25% tax relief on payments and reduce my short term disposable income which may be looked at in a possible legal matter in the next few months. Hence money effectively 'lost' to me could in effect be long term protected if only in a cost neuter (or small gain) capacity
Expert:  bigduckontax replied 1 year ago.

The present problem with all private pension schemes is that the annuity rate, through the overall fall in interest rates, are equally small. I was lucky, i had a guaranteed annuity rate on one of my private pension schemes, but remember such largesse took Equitable Life to the wall. I think that you will find that the 'added pension contribution' is, effectively, an AVC. i can understand your concern, you pay in large sums and receive peanuts in return.

The tax relief on pension contributions is not at 25%, but at your marginal rate of tax providing your plus your employer's do not exceed the annual contribution limit and your pot remains within the lifetime allowance. Both these schemes became increasingly unpopular with the advent of private pension schemes.

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bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thank you Keith
Expert:  bigduckontax replied 1 year ago.

Delighted to have been of assistance.

Thank you for your support.