Tax treatment depends on your circumstances and is subject to change
The income you’ll receive at retirement all depends on the pensions that you hold and how much they are worth.
Your total income will likely be made up of income from a few different sources and will vary depending on the type of scheme you have and how you choose to take your money. So, let’s take a look at how they each work.
If you are eligible for the full State Pension, you will receive an income of £221.20 per week (April 2024). Your eligibility for the full State Pension all depends on the National Insurance contributions you have made over the years. To receive the full State Pension you need to have made 35 years’ worth of NI contributions. And if you aren’t quite there yet, you can make additional voluntary contributions to top up what you have already paid.
The majority of private or workplace pensions are defined contribution schemes. This means that the value of your pot, and therefore the income you will receive, all depends on the contributions you have made and the performance of your investments.
Final salary pensions work a little different to the common defined contribution scheme. With a final salary scheme, your employer promises to pay you a guaranteed income for life from a set age. The great news is that your income is secured without having to worry about the contributions you have made or the performance of your investments. Instead, your income will be determined by how long you worked for the company and the salary you received.
The easiest way to find out what your pension income will be is to ask a financial adviser to check your pension for you. When looking for a financial adviser, it’s important to use one that’s regulated by the Financial Conduct Authority and you can check this on their online register.
Here at Pension Access, we can complete the initial investigation into your pension free of charge, and in most cases continue to provide full advice without a penny to pay. We will let you know if you do not qualify for full advice and how much it would cost to continue.
By asking us to check your pension you will learn the current value of your pension, your pension options for receiving an income, your tax-free cash allowance and our professional recommendation for managing your pension in the best way for you.
We can help you to make the best possible decisions when it comes to your pension.
Taking pension money early is not right for everyone as it will leave you worse off in retirement. Also, tax treatment depends on your circumstances and is subject to change. That’s why it makes sense to get help from a regulated specialist.
