Finished work and Pension Contributions.

K

KOW

Registered User
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Hello All,
I am 55yrs of age and am finished work for health reasons. While working was member of DC pension scheme for 16yrs. It stands at 250k and income continuance policy I have insures around 4k per year will be payed into fund until I reach 60. I then have the usual options at that age.
Should I contribute more to the pension myself when relief will be at the lower rate of taxation or should I just invest my cash in a low cost ETF.
I have no debts and would think that even at age 60 I would not be reliant on the pension fund and if values were poor at that time could ride it out for a few years.
Thanks
 
This would take a look at your overall financial circumstances, but there is one argument in favour of putting money into the pension. From age 65, the Income Tax exemption threshold is €18,000 per year for a single person or €36,000 per year for a married couple where one spouse is over 65. If your circumstances are that you'll be tax exempt from age 65, you could put contributions into the pension now, claim 20% tax relief on them and extract them without tax in retirement. But your own circumstances may render this inadvisable.
 
Thanks LD.

Wife finished work in 2.5 years. DB pension of 18.5k p.a. Plus usual lump 54k.
I have invalidity pension along with income continuance until 60 and then invalidity after sixty.
Property 1 own home no loan. Going to sell now worth 350k
Property 2 new build moving into no loan.
Property 3 RIP worth 250k owe 125k. Rented to council for next seven years payed off in full in nine years.
35k various shares
100k bank post office etc.
 
Thanks for that. A quick look over suggests that you and your wife will be in the tax net after age 65, between her pensions, your pensions and rental income. Looks like you'll be at the 20% rate. I'd suggest that you explore with your DC scheme broker if you have any scope to pay extra into your scheme to increase your tax-free lump sum. If so, that would be worth doing: get 20% relief on contributions now and proceeds tax-free when you retire. Anything over and above that would probably be taxed at 20% so little or no incentive. If your wife is currently paying tax at the high rate, perhaps she could look at paying additional contributions into her pension, focussing on maximising her lump sum initially.
 
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