Having looked after Tom and Elsie for several years, the funding into a pension for her was minimal as they concentrated on Tom’s contributions.
The value being £19,000 – as at February 2014. After the budget announcement in March 2014, the Trivia rule changed to be that if the total of all one’s Pensions was less than £30,000; an individual could take the entire amount out as a lump sum with 25% being tax free and the remainder being taxed at the ‘marginal rate’.
As Elsie is 59, she can take benefits under the Trivia rules from age 60 – in 3 months time. These were the results:
|Current Value||£19,000||(rounded figures)|
|Less Tax Free Cash||–||£4,750|
|Less tax at 20%||(£2,850)||£11,400|
|Net Total Paid Out||–||£16,150|
WITH ADDITIONAL CONTRIBUTION OF £10,000 – £8,000 paid and tax relief of £2,000
|Less Tax Free Cash||–||£7,250|
|Less tax at 20%||(£4,350)||£17,400|
|Net Total Paid Out||–||£24,650|
Thus an increase of £8,500 for payment of £8,000 within 3 months gave a return of 25% (6.25% for a 12 month period) without any investment growth.
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