Introducing the Retirement Expert

RIS are delighted to announce that several local publications have invited us to be their featured "Retirement Expert"

This will involve answering questions from readers on all aspects of pensions, investments and current legislation every month.

Take a sneak preview of our first article below

Do I pay tax on my State pension?

Possibly – any pension that you receive from the State (including the basic Old Age Pension) counts towards your taxable income but you will only pay tax on it if your total income is more than your Personal Allowance.

However if there is any tax due on your State pension it is never deducted from the State pension itself – instead it will be deducted from any other pensions that you may receive or, if you don’t receive any other pensions or income, then you will have to pay the tax separately after the end of each tax year.

RIS are delighted to announce that several local publications have invited us to be their featured "Retirement Expert"

This will involve answering questions from readers on all aspects of pensions, investments and current legislation every month.

Take a sneak preview of our first article below

Do I pay tax on my State pension?

Possibly – any pension that you receive from the State (including the basic Old Age Pension) counts towards your taxable income but you will only pay tax on it if your total income is more than your Personal Allowance.

However if there is any tax due on your State pension it is never deducted from the State pension itself – instead it will be deducted from any other pensions that you may receive or, if you don’t receive any other pensions or income, then you will have to pay the tax separately after the end of each tax year.

I had a heart attack 10 years ago and until very recently I smoked 30 cigarettes a day – does this make a difference to the pension that I can get from my pension plan?

Very definitely Yes – an increasing number of annuity providers will now take into account such factors as health, lifestyle and even postcode.

If they believe that your life expectancy is anything other than normal because of these factors then they may offer you a higher or enhanced annuity – in some cases this can increase the income you receive by as much as 30% each year or more.  

I have three separate personal pension plans – do I have to take the benefits from all three at the same time?

No – as long as you are aged 55 or over you can take the benefits from each of the plans whenever you choose and you can even take the benefits from one or more of the plans but continue contributing to the other.

You don’t even have to stop work in order to take your pension benefits – you could, for example, wind down to part-time work and supplement your income by taking the benefits from one or more of your plans while leaving the other plan until you fully retire.

What is the Personal Allowance?

It is the amount that you can earn or receive before any Income Tax becomes payable – for the current tax year it is £6,475 if you are under age 65, £9,490 if you are aged between 65 and 74 and £9,640 if you are 75 and over.

Importantly it increases to £9,490 from the 5th April in the tax year that you reach age 65 – for example, if your 65th birthday is on 5th January 2011, then your Personal Allowance should increase to £9,490 from 5th April 2010.

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