Posts Tagged ‘Retirement’

State pensions subject to PAYE?

Posted on: May 10th, 2012 by Leighton Reed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

Apparently, 60% of pensioners are unaware that their State Pension is taxable income. Historically this assumption is probably based on the way in which their pension is paid without deduction of tax.

This may be about to change!

The Office of Tax Simplification has come up with an idea to streamline the taxation of pensioners. They are seriously considering bringing the State Pension into the pay-as-you-earn system.

If this happened HMRC would issue a code number to the Department of Works and Pensions who would calculate any tax due and deduct it before making the net of tax payment to a pensioner’s bank account.

If you have no other income apart from your State Pension you are unlikely to be affected. However, if your personal allowances are already used against other income (including other pensions) you would likely suffer a tax deduction. No change is proposed before April 2013.

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Retirement incomes tumble

Posted on: January 18th, 2012 by Leighton Reed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

Expected retirement incomes have tumbled to a five year low with almost £3,000 wiped from their value, according to research from Prudential Insurance.

The survey shows that people retiring this year expect to live on an average income of £15,500, more than £1,000 less than those who retired last year and £3,100 less than those who retired in 2008.

Due to inadequate retirement savings, one in five of those due to retire this year will be forced to survive on an annual income of less than £10,000 .

Experts have attributed the fall to the recent chaos on the stock market, shrinking annuity rates, which dropped by 8% in 2011, the impact of the credit crunch, banking crisis, recession, and concerns over the Eurozone, has been reflected in the fact that expected retirement income levels have hit a five-year-low.

There are some practical steps that workers and imminent retirees can take to ensure a more comfortable retirement. For those who are still working, it has never been a more important time to save into a pension. The longer that savings are invested in a retirement pot, the greater the opportunity they will have to grow.

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