Pension FAQs |

Pension FAQs

Question
Can I have more than one pension?

Yes you can have as many as you like as long as you don’t pay more than the maximum allowed per year.

Question
How old must I be to start a pension?

There is no minimum age; a pension can be started for a new born baby?

Question
Do I have to be working to start a pension?

No, but if you are not working you can only pay £3,600 per tax year.

Question
How much can I pay into a pension?

You can currently pay up to £40,000 per tax year or however much you have earned or expect to earn in a tax year if it less than £40,000.

Question
What is a ‘carry forward’ contribution?

This is where you have earned more than £40,000 and as you have not previously paid the maximum pension in one or more of the previous 3 years so you are allowed to pay more than this year’s maximum amount by using the previous year’s allowances

Question
How much do I need to pay into a pension?

This depends on when you start and how much pension you would like at retirement. Money Matters FS Ltd can help you plan for the right amount.

Question
How do I get tax relief for my pension payments?

The pension company claims 20% tax relief direct from HMRC when your contribution is received, Additional relief for higher rate tax payers is claimed via your tax return.

Question
What is auto enrolment?

This is a compulsory pension that employers have to offer to their workers

Question
I have several pensions, can I put them all into one pension?

Yes, this is possible but with care as some pensions have Safeguarded Benefits that would be lost on transfer.

Money Matters FS Ltd have a comparison tool that can establish whether it is in your best interest to merge all of your pensions into one or not. Contact us for a free pension switch comparison report.
Question
What happens to my pension fund if I die before I retire?

The whole of the pension fund is normally paid to your estate free of tax if under the age of 75. For Final Salary Scheme pensions the death benefits vary from scheme to scheme

Question
What happens to my pension fund if I die after retirement?

If it is before 75 and in Drawdown your fund is paid to your beneficiary tax-free lump sum or tax-free income, but if after 75 it is paid at the beneficiary’s tax rate. With annuity you choose the death benefits to apply at the outset and each benefit chosen reduces your expected pension income payment

Question
Can I have a joint pension?

No, pensions are individual arrangements.

Question
At what age can I start drawing my pension?

From age 55.

Question
Can I take all of my pension in one go?

Yes, but there may be a large tax bill if you do and future contribution allowance will be reduced so it’s very important to get advice before doing so.

Question
What choices do I have at retirement?

Annuity or Drawdown or a combination of both.

Question
Do I pay tax when I draw my pension?

The first 25% is tax free and the rest is taxable at your rate of tax, so if you do not pay tax there would be none to pay up to your personal allowance, if you are a basic or higher rate tax payer then your pension would have tax deducted accordingly.

Question
If I have a personal pension will I still get a state pension?

Yes, if you are eligible.

Question
How will my pension be paid to me when I retire?

Your choice, normally monthly, quarterly, 6 monthly or yearly.