3
How private pensions work
What topics are covered in this chapter?
- Tax relief
- Getting money into a pension for no net outlay
- Drawing an income
- Tax-free cash lump sum
- Pensions as medium-term savings vehicles
- Limits on pension saving
- Pensions for children and non-working family members
The government is desperate for people to save in private pensions so that they do not fall back on the state when they are retired. But why would anyone lock up their money until age 55 and then buy an annuity unless there was some incentive for doing so? The carrot for saving in a pension is tax relief, and for higher rate taxpayers in particular, that incentive can seem incredibly generous. In April 2011 the government reined in the amount of pensions ...
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