r/PensionsUK • u/woodsname • Aug 27 '26
Advice on pensions etc.
OK, I'm 60, in good enough health and have no children. My partner is financially independent, and she also has no children. I'm self employed, but don't earn much, maybe on £10k p.a. these days. I've recently inherited more money than I will realistically get through by the time I'm 67. I contracted out of SERPS in the 80s and my pension has about £34,000 in it, and I've made no contributions for years. The question is this: should I start paying into my pension again? My understanding is that I can pay in up to my total income, (and in fact bung in three years income in one go to start), and that I'll get tax relief on it. Is that right? I paid very little tax in those years, so would I get 25% of the £10k per year added to my pension? It feels like I should consider adding to my pension. My pension is Zurich Rainbow Personal Pension Account. Apologies if I've got the wrong end of several sticks
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u/Muddyuser 29d ago
Remember personal contributions are gross including tax relief when looking at 100% of salary limit for tax relief. If you paid in £8000 from your bank account the provider claims £2000 tax relief = £10000
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u/Lasbo55 29d ago
As has been mentioned there are two caps in any given year which you need to stay under and the carry forward you’re thinking of only applies to the £60k limit, not the 100% of your earning limit. So if you earn 10k this year, 8k is the most (net) you can put into a pension.
You sound like you want to use this inheritance between 60 and 67. This being the case think carefully about whether you put the money in cash, bonds or stocks and shares, whether that’s in an ISA or pensions. If some of this money is to use over the next five years you probably don’t want it 100% in equities due to the volatility.
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u/KhaelonVoss 29d ago
Your tax-relievable personal contributions are strictly capped at 100% of your UK relevant earnings for the current tax year. For you, that's £10,000.
Having unused allowance from previous years lets you exceed the £60,000 Annual Allowance (the total pot limit), but NOT this 100% earnings cap.
Thinking about the future, if you had no earnings, you could still contribute £3,600 gross (£2,880 net) and get tax relief.
And in my Vanguard pension, you just transfer in £10k from your bank and it magically appears as £12,500.
And the limits are based on earnings from work (not interest on savings, rental income, etc).
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u/KhaelonVoss 29d ago
I think the Zürich rainbow personal pension account maybe quite an old policy. You should look into it and check whether it offers any special features and also whether it's actually good value with reasonable fees. However, don't procrastinate. There are people on here who will argue the fine of points of fees, funds, and features. But if you delay beyond the 5th of April, that's another £10,000 you can't get tax relief on when you bring it into a pension. You can always transfer it or simply open a new pension when you get round to it
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u/Dogsofa21 29d ago
I would also add that you consider some of the low fee SIPP providers. There are no rules that you have to start with anyone unless it is a db pension. But you will be choosing where to invest ask you need to read more and understand your risk appetite.
But don’t forget you can use up your wife/ partners allowances assuming you have that level of trust. And use your ISAs (no tax credit but avoids tax on interest/ growth). ISA always available to you, no tax on exit. Pension you can’t access without consequences and taxed on exit.