To remain ignorant ... agreed ... ... but just for you ... I draw a monthly pension (which ain't a lot) from one of my first jobs but I only receive 50% of it because half goes in income tax deducted by the pension fund... the pension pot it comes from originated from already taxed wages in the 1980s / 90s ... hence I've actually suffered 2 lots of income tax on the same pot of money ... now I realise you're not a maths teacher so, if you're still struggling, I'll PM the calculation
That bit in bold would've received tax relief surely? So in effect you wouldn't have paid tax on the original contributions. Also wouldn't your employer have matched your pension contributions - also not incurring any tax on those either?
You pay tax oneway or another from when you start working until to the day you die, then you family pays tax on what you accumulated through your life Unless you are a chancer who never holds down a proper job but relies on petty crime and cash only for anything close to resembling work
You are correct about the employer part ... but at the time my contributions were going in to this particular pension scheme they were from my post deduction wages ... rules have changed since back then but there is still that element of double taxation ... and if you are a higher rate taxpayer you lose half of each pension payment ...
In very simple terms when employed in a PAYE job the first deduction is NI, no tax paid, Second deduction is Pension contributions (if in a pension scheme) no tax paid, then tax code is applied and you pay Income Tax on the residue
Fair enough Fosse. I didn't know about the 80's, I think tax relief on contributions was there in the 90's. Slightly different topic but I think it was Pension ISA's that were considered excellent investments because you immediately got about 33% uplift on your contribution and if you were a higher rate tax payer they'd claim back the extra so it was an even bigger uplift, and that was before any growth on the investment itself.
Are you sure about your pension contributions Fosse, the finance act of 1921 was when tax relief was given to pension contributions and whilst I agree that the rules have changed over the years, I’m pretty sure that part of the rules haven’t. The biggest changes that I remember were being able to opt out of SERPS and changes to AVC’s which were being abused by wealthy people as a way of avoiding paying tax.
Not 100% mate ... but it was what I was told when I was talking to that particular pension administrators when deciding what to do with it ... either way - still grates to lose half of it ...
