Question
My employer has changed from Standard Life to Scottish Life - I pay just 2.5% of my salary and my employer pays 7%. I have been in Standard Life for 11 years and have a fund of £44000 as I transferred from previous pension with Norwich Union. Should I continue to pay into Scottish Life pension just to get the benefit from employer's contribution? I am 60 this year and hope to retire May 2011. Answer
Provided you can afford the 2.5% employee contribution and there’s no option to receive the employer’s 7% contribution in any other way (e.g. via higher pay) then I can’t think of a reason to say no.
There’s also a small tax benefit in that you’ll enjoy tax relief on your pension contribution and can then take a quarter of the pension fund as a tax-free sum when you retire.
Because you’re likely to retire within a year I’d suggest holding your money as cash within the pension so that you don’t risk losing money between now and retirement (consider doing this with your Standard Life pension too).
It would make sense to leave your Standard Life pension in situ, there’s no point in moving it across to Scottish Life when your retirement is imminent (and there’s probably little point moving it anyway).
Finally, when you do retire remember to shop around for the best annuity deal you can get, it’s likely to be time very well spent.
Enjoy your retirement when you get there!
My employer has changed from Standard Life to Scottish Life - I pay just 2.5% of my salary and my employer pays 7%. I have been in Standard Life for 11 years and have a fund of £44000 as I transferred from previous pension with Norwich Union. Should I continue to pay into Scottish Life pension just to get the benefit from employer's contribution? I am 60 this year and hope to retire May 2011. Answer
Provided you can afford the 2.5% employee contribution and there’s no option to receive the employer’s 7% contribution in any other way (e.g. via higher pay) then I can’t think of a reason to say no.
There’s also a small tax benefit in that you’ll enjoy tax relief on your pension contribution and can then take a quarter of the pension fund as a tax-free sum when you retire.
Because you’re likely to retire within a year I’d suggest holding your money as cash within the pension so that you don’t risk losing money between now and retirement (consider doing this with your Standard Life pension too).
It would make sense to leave your Standard Life pension in situ, there’s no point in moving it across to Scottish Life when your retirement is imminent (and there’s probably little point moving it anyway).
Finally, when you do retire remember to shop around for the best annuity deal you can get, it’s likely to be time very well spent.
Enjoy your retirement when you get there!
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