Putting some of your VR money into your pension

[stroller]

Hi everybody,

I have been offered VR and was wondering can i put all the remaining money over 30k into my pension?

if so what difference would putting 20k into your pension? i am 53 in August and my leaving date would be in October so i would have 1 year and 10 months until i hit 55 when i intend to call in my pension?
I always intended to go at 55 but feel that if i dont take VR now and carry on it might no be offered again when i get to 55.

your opinions on this would be most helpful

[RobertT]

Hi everybody,

I have been offered VR and was wondering can i put all the remaining money over 30k into my pension?

As I’m sure you know the first £30,000 of a VR payment is tax free and yes you should be able to put the remainder into either a RM AVC(flexiplan), stakeholder, SIPP or personal pension. But not directly into your final/average salary RM pension.

if so what difference would putting 20k into your pension? i am 53 in August and my leaving date would be in October so i would have 1 year and 10 months until i hit 55 when i intend to call in my pension?

If you put all of the VR money over £30k in a pension you can avoid paying tax on it. Or more to the point, you will pay tax initially but then get that tax back when the money goes into the pension, in the form of tax relief.
If you use a RM AVC, that could increase the tax free lump sum when you take your pension at 55.

And from April 2015 there will be no more rules forcing you to take out an annuity with your pension pot. So you will be able to take the money out of the pension in one go but potentially pay tax on it. Or take it out in smaller amounts while keeping your total income below the Personal Tax Allowance, currently £10,000 per year, and avoid paying any tax whatsoever.

Brief details of these changes can be found here:
http://www.hl.co.uk/news/articles/pensi ... reen-light" onclick="window.open(this.href);return false;

I always intended to go at 55 but feel that if i dont take VR now and carry on it might no be offered again when i get to 55.

your opinions on this would be most helpful

If I was your age I would grab it with both hands.

[borders]

Robert , how much can you earn before you pay the 40 % tax rate ?

[cloherty1976]

Robert , how much can you earn before you pay the 40 % tax rate ?

£41,865

[RobertT]

Robert , how much can you earn before you pay the 40 % tax rate ?

£41,865

You beat me to it . From April 2015 when the new pensions regime comes in, that will increase to £42,285.

[borders]

thanks chaps