Four fifths (80 percent) of people between the ages of 55 and 64 did not know that their pension contributions would be capped if they were to pull taxable amounts out of their pot, according to NFU Mutual.
The company found that HMRC figures show that in the third quarter of 2020 alone, 347. 000 people are immersed in their pension pots, triggering a cap that limits future contributions, including employer contributions, to 4. 000 GBP per tax year cap.
The pension fund investigation also found that almost a third (32 percent) of people who are over 55 years old wanted to retire before retirement, which makes a cap on their contributions more likely.
In addition, more than two-fifths (43 percent) of the age group who had pensions planned to continue paying into them.
Sean McCann, a financial planner chartered by NFU Mutual, said, “It can be tempting to go after age 55. A large majority of people do not know that it will limit the cost they and their employer can subsequently save on a pension.
“Given that many workers over 55 will be at the peak of their income, there is a risk they will miss out on their employer’s contributions and valuable tax breaks.
“Many who take their pension do so without financial advice. You are not aware of this trap. It is always important to seek advice when making financial decisions that can affect your retirement income. ”
One in five (20 percent) of 55 to 64 year olds planning to withdraw money from their retirement did so to offset the loss of income as a result of the coronavirus pandemic, while 12 percent of respondents said they had changed their attitudes access to their pension due to the pandemic.
McCann added, “These results suggest that a significant number of workers plan to retire before they retire. We may see more people retire as the Chancellor’s vacation program and support packages wind up next year. ”
Pension, Liability, Accounting, LON: XPS, Defined Benefit Plan
EbeneMagazine – GB – 80% of those approaching retirement without knowledge of the contribution ceiling
. Related title :
– 80 % of those approaching retirement without knowing it Contribution cap
– <a href = "/? s = UK companies that reduce their pension obligations for Covid-19 by up to 60 billion. Overestimate GBP > British companies overestimate pension obligations for Covid-19 by up to 60 billion. GBP