How Much Extra Can I Pay Into My Pension? Your Guide To Extra Pension Payments
Pensions. It’s something many of us dismiss, a far-off prospect that we don’t need to worry about until we’re older. But pensions are hugely important, ensuring that you can live comfortably once you decide to stop working.
For most people, the payments that come directly out of your pay and from your employer are enough to manage. But if you have extra income, you might be wondering how much extra you can pay into your pension and whether it is worthwhile.
In this article, we’ll discuss exactly how much extra you can pay into your pension, and whether you can withdraw pensions under 55.
Can I pay extra into my pension?
The short answer is yes, you can invest any amount into a private pension - as often as you want! This can be hugely beneficial if you have money spare and want to secure your future past retirement. Plus, the money you pay into your pension also qualifies for tax relief. This means that any money you pay in will be boosted by at least 25% - or more if you are a higher taxpayer.
Investing additional money in your pension is a great way of setting yourself up properly for retirement.
Can I withdraw my pension under 55?
If you're thinking about topping up your pension, it’s important to remember that you won’t be able to take money from it until you are at least 55. Because of this, it’s important not to put away any savings you think you may need before you retire, as you can't get it back again.
Once you start to make pension withdrawals, they will be taxed, as they are seen as income. So, make sure you don't withdraw too much in one year, as it may cancel out your tax relief.
Should I pay extra into my pension?
If you have spare income and are approaching retirement age, it’s a great idea to start topping up your pension. Not only will this offer you some tax relief on your savings, but it will also set you up well for when you decide to retire.
Before deciding if you’re ready to start paying extra, be sure to contact a financial adviser, like the experts at Integritas Financial Planners, before dealing with large sums of money. Get in touch today to learn more.
Tax rules are subject to change and taxation will vary depending on individual circumstances.
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