How much could I and should I put in my pension?
Every UK Resident can invest £3,600 each and every year into their pension fund. You receive tax relief on this amount even if you don’t pay tax!
If you have earned income you can put in 100% of your earnings – so if your salary is £50,000 you can invest £50,000 into your pension scheme. There is an upper limit, which this year is £235,000, so that shouldn’t be a problem for most of us.
If you are employed by a Company (even if it is your own Company) there is no upper limit, providing the contribution can be demonstrated to be ‘Wholly and exclusively’ for the benefit of the business and the beauty is the Company receives full Corporation tax relief on the whole contribution, so don’t let your employer ever complain about paying Corporation tax it is easy to avoid.
So how much should you save towards your retirement pension ?
This is the more difficult part. I’ve looked at many of the online “How much do I need to save for retirement” calculators and they leave me depressed as they always tell me I need to save ridiculous amounts every month otherwise I am going to starve to death by the time I’m 73.
The short answer is: save as much as you can reasonably afford without causing yourself hardship. It may sound obvious but start small and build up, as every little helps. But do be realistic, and try and aim for 10% of your salary a s a rough guide, but you can start with a Stakeholder pension from as little as £20 per month.
At Pension Matters we can provide you with examples of what you are likely to get in terms of retirement income for different amounts saved. All the Pensions schemes we promote have no commissions to pay so you can stop, start increase or decrease as often as you wish without penalty.
It’s never to early to start your retirement planning so whether you are saving for a pension, an annuity, want to take early retirement with a tax free cash lump sum contact Pension Matters – we are there to help.