Chapter 10: Pensions

Question 1

Age limit to contribute to pension

Answer 1

75

Question 2

Maximum contribution

Answer 2

Higher of:

Earnings and

3600

Question 3

Annual allowance

Answer 3

40,000

Question 4

Tapered annual allowance

Answer 4

40,000 is reduced by £1 for every £2 by which adjusted income exceeds £240,000, down to a minimum of £4000

Question 5

ANI for an employee

Answer 5

Net income PLUS
Employee contributions to an occupational pension scheme
and
Employer contributions

Question 6

Carry forward annual allowance

Answer 6

up to three years

Annual allowance is not available to carry forward if the individual was not a member of a pension scheme in the year concerned

Employer contributions count towards usage of annual allowance

Question 7

Annual allowance charge

Answer 7

if gross contributions exceed the maximum available annual allowances the annual allowance charge is made at the tax payers marginal rate of tax (highest rate they pay)

Question 8

Withdrawing pensions

Answer 8

from age 55 they could :

-Withdraw the whole fund as a lump sum

-Withdraw the tax-free amount as a lump sum and also buy an annuity or

-Leave the funds in the pension scheme and withdraw cash when required

withdrawal may include a one-off tax-free lump sum of up to 25% of the pension fund

max tax-free lump sum is 25%*lifetime allowance