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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4550
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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UK Personal PensionBackground: I am 62 years of age and

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UK Personal Pension
I am 62 years of age and already have a substantial final salary pension from a previous employer. I have no need to take out another pension I am in full time employment and intend to work for another 2 to 3 years.
My current employer has now given me details of their new Group Personal Pension plan provided by Aegon. My employer will contribute up to a maximum of 6%
I understand I can opt out of this. However, it seems to me that this could be an excellent tax efficient short term savings vehicle.

If I choose to contribute a substantial percentage , my employer puts in the 6% maximum and I build up a pension pot of £20-30k over a couple of years, which still leaves me short of the lifetime allowance, please advise if my following assumptions are correct –
1. Contributions that I make will be taken out of my gross pay before tax
2. I could choose to retire at 64 or 65 in 2 to 3 years time and cash in the entire amount
3. 25% would be tax free, the rest would be taxed at my top rate
4. In simple terms, by way of example, for every £1,000 monthly gross pay, if I contribute 10% and my employer contributes 6%, my PAYE would be calculated on £900. Then at some point in the future I could take the £160 as a lump sum, of which £40 would be tax free, and I would be taxed at my top rate on the residual £120.
5. If I were to die before cashing in then the value would be given in full (net of fees) to my nominated beneficiary


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Dear Friend,

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

Yes, I certainly agree with you. You have very good understanding of your situation and I completely agree that this can be a very good and tax efficient savings module which will leave you with good amount of retirement kitty over period of few years.

1. Yes, what you pay is paid from your gross income, BEFORE tax.
2. Yes, you have rightly understood this. You can cash out the entire sum.
3. Very correct. The first 25% would be tax free and the remaining amount would be taxed at your tax rate.
4. Correct.
5. Again correct. It is given to your nominee.

I am sure this would help.

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Warm Regards
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4550
Experience: Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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