This is my first time posting here so if these questions have already been answered I appologise!
I am confused as to the advantages of a pension. I find the jargon confusing (what does "marginal rate of tax" mean). Can someone explain in plain english, as to what is involved in a pension and how it is beneficial to me by answering the questions below.
I am over 30, self employed in a limited company and say for arguments sake I earn 50K per year.
If I decide to start a pension and put 10K into it :
1. I am charged 5% (or thereabouts) upfront?
2. In addition I am charged 1% (or thereabouts) of the amount of money in the pension each year as a management fee whether or not the pension fund actually increased that year?
3. I get a tax rebate at 42% on the total amount of money I put into the pension each year?
4. When I retire I can take a lump sum of 25% without paying tax on it?
5. After the lump sum I pay tax on any money I take out of the fund after I retire like any other normal person (ie 20% or 42% or whatever the rate will be when I retire)?
6. Does it make a difference if I put the money in from my own bank account or if my own company puts it in for me?
7. If my company puts in a contribution for me in addition to me putting some money in is it all treated the same as if i put it all in myself? ie do I get the same tax rebate? or are there tax advantages.
Sorry for all the qestions but it is very difficult to get a straight answer from the banks without all the confusing jargon.
I am confused as to the advantages of a pension. I find the jargon confusing (what does "marginal rate of tax" mean). Can someone explain in plain english, as to what is involved in a pension and how it is beneficial to me by answering the questions below.
I am over 30, self employed in a limited company and say for arguments sake I earn 50K per year.
If I decide to start a pension and put 10K into it :
1. I am charged 5% (or thereabouts) upfront?
2. In addition I am charged 1% (or thereabouts) of the amount of money in the pension each year as a management fee whether or not the pension fund actually increased that year?
3. I get a tax rebate at 42% on the total amount of money I put into the pension each year?
4. When I retire I can take a lump sum of 25% without paying tax on it?
5. After the lump sum I pay tax on any money I take out of the fund after I retire like any other normal person (ie 20% or 42% or whatever the rate will be when I retire)?
6. Does it make a difference if I put the money in from my own bank account or if my own company puts it in for me?
7. If my company puts in a contribution for me in addition to me putting some money in is it all treated the same as if i put it all in myself? ie do I get the same tax rebate? or are there tax advantages.
Sorry for all the qestions but it is very difficult to get a straight answer from the banks without all the confusing jargon.