Short posts this week. I’m on early shifts again.
I have a pension. A proper one, not just the government’s one. Which means I get something back that’s related to what I paid in, not just the government scheme where everyone gets the same whether they’ve paid vast amounts of NI or none at all.
It isn’t a huge pension. It goes up a little each year and it’s currently looking at paying out about £10,000 a year with a lump sum at the start too. I can live on it, but I won’t be living the high life. Which is okay. I don’t much like heights. They tend to be painful to fall off.
I’d still have to do some kind of work to pick up extra but the pension will cover the basics. I’m pretty relaxed about it. I won’t have to slog myself to death just to stay alive.
Now we can take that pension money out and spend it all. Is that a good idea? In my case, probably not. I doubt I can invest it any better than a professional pension fund manager and I’d probably spend it all on whisky and a wild woman. Then when retirement day came I would have to slog myself to death just to stay alive. I’m leaving it alone.
As I understand it, if you take some out, the first 25% of that is tax free and the rest is taxed as income. If you take it all in one tax year and it’s substantial, you’ll pay 40% tax on a large chunk of it. If, like me, you aready have an income then that withdrawal just makes your tax bill worse. So taking it out isn’t a good option for me. I don’t need to anyway.
It is nice to have that option though. Maybe at some point in the next few years I’ll need a sudden large cash amount available. It’s good to know the option is there.
For now though, it’s best that pension stays where it is. I know what I’m like with money. It’s slippery stuff.