Martin Lewis Busts Pension Myths With His Money Masterclass | This Morning
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- čas přidán 17. 06. 2024
- It’s one of the biggest battlegrounds of the upcoming election, but pensions are a much confused topic. With so many different types, which one should you opt for? And is a pension pot really essential? Our money man Martin Lewis is live in the studio to take it back to basics, with his pension masterclass.
Broadcast on 18/06/2024
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Money is not meant to control people rather it is meant to be put to work producing more money for you. You cannot build wealth without putting money in its rightful place.
I'm so happy I made productive decisions about my finances that changed my life forever,hoping to retire next year.. Investment should always be on any creative man's heart for success in life .
I'm really interested but I just don't know how it go about it. I heard people really make it huge trading..
As a beginner, it's essential for you to have a mentor that is verified by finra and SEC to keep you accountable. I'm guided by a widely known financial consultant Stacey Macken
Stacey demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit
I remember giving her my first savings $20000 and she opened a brokerage account for me it turned out to be the best thing that ever happened to me.
Trouble is the tax threshold being kept at £12,570 so once’s the state pension is factored in most will still be paying tax even on a small pension 😡
So what ? It’ll only be 20% on the excess.
Do you want to keep 80% of the excess or 100% of nil excess ?
Taking mine at 55 retiring as soon as I can
The reason you pay tax is because the money originally put into the pension was not taxed
@babyfreezer exactly and more importantly you've compounded the benefits of the saving over years inside the scheme without capital gains
I like Martin he talks sense and truth
Martin is always brilliant.
The biggest thing no one is talking about is how much you really need to save and how poor most modern workplace pension schemes are compared to old DB schemes. Pay attention what % your employer is putting in and if they will match your payments, DON'T JUST PAY THE DEFAULT MINIMUM IT'S NOT ENOUGH , NOT NEAR . If you don't put in more than the minimum you will be worse off then your parents come retirement.
Pensions are so complex. From someone who has worked in finance for 16 years, I had to concentrate to understand parts of this.
I'm glad you said that. He's brilliant and knows his stuff but he's very wordy and speaks too fast, I'd much rather he just kept the key points to make it clearer to understand. I listened again with the subtitles on and it helped.
@@SevenEllenhe’s explaining a complex system on a morning tv show 😂
The complexity is sadly, I suspect, intentional to dupe the average person out of claiming their government money. Oh and so that commercial financial firms can make money giving advice. Great that he referred people to the free advice service. How would the average person have time and understanding to engage with this?
Actually pensions are very very simple the industry just does its best with jargon , smoke and mirrors to confuse people so they can charge you fortunes for virtually no work
The problem is not saving money in a pension, you sign a piece of paper and wait for 40 years. It is what happens when you come to retire and need to know what to do with it. He could have added some information on that. Because most people don't understand annuities or draw down.
The House of Lords or the “Upper Chamber” should consist of people like Martin Lewis! A subject matter expert there to advise the elected government and hold them and their policies to account. A person who doesn’t have (at least strong or overt) party political views but does have a view of what is right and wrong based on his specific expertise and a sense of moral fibre! Reform the lords to include more people like this!
I started a pension at age 28 and worked until I was 69. It was the best financial decision that I ever made. I took 25% tax free when I retired. The pension fund goes tax free to dependents if you die before age 75 and is tax free until drawn from if you die older than 75. It's no good saving unless you save over the long term.
Problem is if the incoming government changes the rules.
You could have stopped long before 69.
Look up the annual gains on your pension. Most have an appalling average of 4-6%.
@@steve6375. Correct….if YOU have selected and invested in an ‘appallingly average’ fund within your pension ‘wrapper’. It’s important to select the correct funds, those that are appropriate to yourself….or seek advice from a FCA-regulated adviser with the necessary experience and qualifications who can help you do so. Whereas, if you have just left it in the pension plan’s Default Fund either through ignorance or laziness then you’ll most likely have experienced the type of performance you referred to. But it’s not too late to do something about it. But YOU have to do something about it. You are the adult here(!) If you do nothing then it’s only gonna affect one person and there’ll only be one person to blame: YOU. That is the cold, hard truth. It’s your money, your pension, your life, your responsibility to do something about it. Or just die poor.
@steve6375 you are in control of what it is invested in.
S&P index has averaged 11%. This year 25%.
If yours has underperformed, it is your fault.
If you do a net contribution it's actually a 25% top up. The maths is the same as 20% tax relief though.
I.e. Put £800 in and it becomes £1,000.
Being frugal means, having choices in life and being able to retire early.❤
After having no life when you were young enough to enjoy things!
Should be nighted, may not apply for all, but he has so many good tips for most
Legend
Thank-you that is the best ever explanation I've ever heard (swiss roll). I'm lucky in that I'm in a final salary scheme, but even we can now take some of the tax free sum once we're 55, but continue to work at less than 4 days / week? - I think!
Remember though with a pension you can't retire before age 55. If you want to retire before age 55, then also save into an ISA (invest in index funds). That way you can use the ISA to retire before 55, if you want to.
I pay 2k per year into my pension and my employer tops it up by 10k ! No savings account can come close.
At the moment you can access your Public service pension from 55 going up to 57 in a few years time. Everyone should have a government gateway account so that you can check your National Insurance record and a few other things.
Im sure you mean can access your private pension from 55 rising to 57 … state pension is currently 66, rising to 67.
No, public service pensions can't be accessed at 55. Private pensions can, I accessed mine but can't access my public till 67
@@Gilly-gx8rt No, I'm sure they meant Public service pension, as in a Local Government Pension Scheme for people who have worked in the public sector.
@@taekwanlew Yes they can, I think you are confusing Public service pensions, as in a Local Government Pension Schemes for people who have worked in the public sector, and The State Pension.
Pre tax salary or pre tax income ? I’ve deferred my SE pension and have a small rental income that will soon drag me into paying tax due to fiscal drag . I’m still paying contributions to my pension scheme - is this tax allowable ?
Good assessment, the bit you missed out is you’re not in control and THEY keep changing the rules. I’m out 100%. I started with a final salary, then it was changed to a money purchase, then it was taxable at draw down, then when I was 49 they changed it 55 before you could cash it in. Beware kids, it’s going to get worse🤨
It was taxable on drawdown as it went in pre taxed.
@@Jasperroodog The part that really annoys me is that it’s portrayed as if the government is gifting you money. They’re not, you earned all of the money. If they give you a tax-break they are just FINING you less for having a job🤔
It's now 57 from 6th April 2028 affecting people born after 6th April 1971.
@@boballan1853 Taxes are necessary in a civilised society, in order to pay for the public services that most of us and the our country rely on. And I think it's only fair that higher payed should pay more tax. I do think that the government should give some more money back to 20% tax payers into their pension so they at least have a fighting chance of saving enough money to retire well after a lifetime of work
@@fredatlas4396 The higher paid do pay more. It's a percentage. My point is that I was paying into a pension in good faith from the start and half way through they changed the rules. That is not a civilised way to behave.
Made me hungry, I fancy a piece of Swiss roll now
Roaring at this!
Swiss roll with blueberry jam and whip cream.
I do not no any poor pensioners, Some of which have never paid a penny into the system!
One inaccuracy here is that if you take the jam first sponge late option you will not be a non taxpayer if you draw your state pension because that will use up most of your personal allowance. Probably the best you can achieve is paying tax at only basic rate.
So you put your money in a pension. The government use the interest on it, then tax you for taking it out again.
No. This is totally incorrect. You can invest your pension in whatever you like, the government doesn't see a penny it will sit with a pension provider like Fidelity or Vanguard with the money invested in whatever (if your sensible it will be mostly in stocks and shares plus perhaps some bonds) you get the return, it sits in you pension until you choose to draw it down after retirement age, at which point some tax may be payable
@@patmanrick why am I paying tax on money I have already paid tax on?
@TazBo-wd2ig Your pension contributions are TAX FREE. You only pay tax when you withdraw it as it's classed as an income . Did you listen to the video ?
@@TazBo-wd2ig you're not, that's the point. You didn't pay tax on the way into your pension, so you pay on the way out (with 25% tax free part of course)
But what if I don't like Swiss Rolls? Can I apply the same to Collin the Catapillar even though it's not my birthday until November?? 😥
Make people aware of MPAA when talking about drawing pension income.
Love a workplace pension. 34 and 70k in mine already. Compound interest is your friend
Check the average annual gain of your pension fund. It is often awful. They invest in expensive funds (cos they get commission), performance is poor and they have high charges. Some funds let you change to a better ETF tracker or self-managed fund. It is well worth finding out (could mean at least +200K more when you retire!).
@@steve6375. That may have been the case a long time ago or if you have kept oldstyle plans and not reviewed or switched them. If not, why not ? You’d review your house insurance, or replace your car or phone or spend a huge amount of time researching your holiday in order to get what your want/need. So, why not do the same with your pension? In fact, it should be THE priority since you’ll need to use it to pay for your house insurance, car & holidays after you have stopped working. OR….you could be poor instead. YOU choose.
@@markcoomber8222ah well, there you go. It's the poor old punter who is expected to become a pension expert and regularly review their pension, when they thought that their pension company, who are the experts, would act in their best interests. The difference between a car insurance policy and a pension is that the pension is for 40 years and the amounts at stake are 100k or more!
@@steve6375it's a wrapper not a product! You can invest your pension in whatever you want to
EDIT - read the rest of your comment, I see you know this already
If you take money from your pension the annual limit you can carry on paying in is greatly reduced - he didn’t mention that bit
Only if you flexibly access the money. This triggers the money purchase annual allowance. Taking your tax free cash only does not trigger the reduced allowance, only taking your taxable income through flexible drawdown
And max risk as well as it should bring in higher yields over the next 5-20 years. 😀
Can get at it until your 57 not 55, come on man Martin keep up!
What he doesn't say (can't say) is that most pension schemes are terrible! Even if you are 22 years old they will typically put a lot of your contributions into bonds (which don't even keep up with inflation), with the rest they invest in dozens of funds (which each charge around 1%), the funds are really bad performers (e.g. FTSE) , return typ 4-6% and have high charges, instead of good performers (e.g. USA or even just a global market tracker which has averaged 12% in last 5yrs), they hardly ever tweak the portfolio and they charge hefty fees to 'run' the scheme. So if you contribute say £40 as a standard rate tax payer, the difference between 4% typ. pension scheme, and even just simple a self-invested SIPP at 9% in a global ETF means a difference of over 20K in twenty years. Over 30 years the difference is 100K or more! So check the past performance of your work and private pensions and compare with a SIPP - even the Vanguard 'LifeStrategy Retire at 2045' pension fund returned 14.75% in the last year (avg 9% over 5 years) and you don't even have to manage that yourself.
Yeh you need private one.
Private pension, good financial advisor and you'll be okay.
You can change your workplace funds to something else. There's usually one option that resembles a global equities tracker.
@@kk813 , true. I opted out of the NEST scheme and had my workplace lodge into my own personal pension.
This is why to save like a squirrel all your life, and bank hop. Go from one decent interest percentage to another, chuck money into ISAs when they're good, and move it into Easy Access Accounts when they're not.
Labour are going to change all the pensions rules to raise tax so I’ll look forward to a new Martin discussion on how to avoid them?
In 30 years there will be no state pension unless you have spent your life on benefits!
Those who spend their life of benefits are likely not paying National Insurance contributions. Therefore, they will either have a very small state pension or no state pension and no private pension. Also, of course, there will be pension schemes. We are all paying in now , therefore they must pay out when the time comes. 30 years is a blink of the eye.
I'm already paying into a work based pension and my employer pays in to. If I increase the amount that I am paying does my employer have to increase the amount they put in as well?
No, this will depend on the company policy
The minimum workplace contribution is set by law at 8% of earnings, your employer is required to cover 3% but can pay more if they choose, however they are not required to pay over the 3% statutory minimum.
I’m sorry but he should no longer be called Martin Lewis, it should be Sir Marin Lewis!
If you're a higher rate tax payer the extra 20% is not automatically added to your pension contribution. You have to claim it back either in a self assessment or send a letter to HMRC
Martin explained that in the video, and you don't have to do this if you pay into your pension through salary sacrifice.
@@UKGeezerAt 1:00 he said "if you do it via your workplace that happens automatically". That's incorrect. Then at 2:45 he said "if you're a higher rate tax payer you put in £60 and £160 gets put in". Similarly that's incorrect. He only mentioned claiming the additional 20% back via self assessment if you're self employed. I'm surprised he wasn't clearer as people are losing out on thousands of pounds. Salary sacrifice makes it far easier as you pointed out
Just to point out that you only get the 40% tax relief on the proportion of your salary between £50,271 - £125, 140. You only get 20% relief on the sum between £12,570 - £50, 271. If your fortunate to be one of the 12% approx who earn over £125,140 then you get 45% tax relief on earnings over that figure.
Second part totally totally wrong. You can still pay £2880 into a pension and get £700 tax relief on top of that. Even if you have no job. You also get tax relief on "100%" of your income upto £60000. (This includes your personal allowance in the equation) If I earn 30k I can match that by putting 24k into a pension and get 6k tax relief....making 30k !
@@zortzsborgnine3983 yes your correct, my bad in that it appears i am saying what the total is someone can pay into a pension.
basically trying to point out that anyone in the 40% and above bracket is not getting anything extra on that initial £50,271 that someone below that amount is not getting. Still not sure now if that makes sense … lol
So if the tax free allowance is (£12,570 per year) That means if I have no other income that is the amount I can take out tax free each year?
If you have no other income except a defined contribution pension draw down you can take £16K per year tax free because 25% is £4K and the remaining £12K is below the single person's tax allowance.
@@steve6375 Thank you. ❤
[Edit] That is my plan to retire early until state pension age.
@@wakey87 Combine with S&S ISA if you need more. Thats my plan.
Remember you pay no NIC when you draw your pension.
If you wait until 67 then you'll be getting the state pension so only if you take your private pension before 67 would you get 12,570 tax free.
I didn't know you were taxed on it if you wanted to withdraw it in one go if you're still working 😮
Essentially its an income source, so its subject to tax working or not withdraw all or bit by bit. This is why you need pension and tax advisor to optimise the most effective way to draw money.
Why is there never a mention of higher rate pension tax relief
It works exactly the same. It goes in pre taxed from source most people. And yes higher tax rate employee pay more into their pension because of that. It only cost them effective cost of £60 for each £100 worth.
It only get bit more hassle if you have additional contribution with taxed incomes. Then you need to claim the tax relief back via self assessment
Global equity will x2 every 12-14 years (real terms) if you take the 5-6% above inflation number.
You can use your pension to invest in a global equity fund
I wish my employer gave more than the legal minimum. It's pants 😢
If you were an employer you would think differently.
@@aacmove What does that have to do with anything?
@@Thaitanium73 think about it!
@@aacmove I don't need to, your comment was completely irrelevant.
@@Thaitanium73 Why is it irrelevant? It responds directly to the comment.
I wish Martin had covered the scrapped LTA and Keir's statement that Labour would bring it back. It is great having your 40 saving plan used as a political football.
II think they have given up on reintroducing it now as it would be too complex to do.
Believe Rachel reeves dropped that a few weeks ago Ie won’t be brought back
So when I retire and get my state pension can l get my private pension tax free or just 25%
You get 25% tax free and the rest is taxed at your marginal rate as income
I dont understand how the last bit is not taxable because youre not a "tax payer". Anything you take out of a pension is considered income, so its still taxable over your personal allowance of 12k right?
That's correct. After the tax free 25% lump sum, only the first 12k per year that you withdraw is tax free once you stop working. Amounts above that will be taxed at the usual 20%/40%/45% thresholds. People often think it's all tax free but it's certainly not when withdrawing meaningful amounts.
It's deplorable that we use the word "pension" to cover both the national Ponzi scheme and a private DC pension scheme. They have very little in common.
In what way is the state pension a Ponzi? Nobody makes contributions to it specifically and no returns are promised / shown
Yeah… but you get taxed on the pension as income at the source of use. If you ever live long enough that is.
Wish I wasn't thick. Too complicated.
Key takeaway here is: if you are saving for the long term (i.e. retirement) then it's probably a good idea to out a decent amount of money in your pension.
Once you have done so, check what your pension is actually invested in, and (this is not me talking not summarising Martin) ensure that it's invested in a global index fund. If you really want minimal hassle or decision making then go with a Vanguard target date fund (which is basically based on when you expect to retire and does all the allocations for you). Good luck
Or you can withdraw 25% tax free and the rest withdraw in next 3 years after April of next year so you pay less tax and not working at all.
Glad he pointed out that it's STILL 55. although the pension age has risen ( and will continue to rise) it would need an act of parliament to raise the early retirement age as well. The government wants pension providers to match the retirement age, but if you have an "unqualified right" to take your pension, you can still go at 55
Unless you are born after 6 April 1971 where the Normal Minimum Pension Age (NMPA) is the earliest age most people can start withdrawing money from their personal and workplace pensions has increased from 55 to 57 from 6th April 2028.
This coincides with the rise of the state pension age to 67.
There seems to be a ten year link, as in no earlier than ten years before your state pension is due
@@guyr7351 absolutely as my state pension age will probably be 75 (what I'm calculating on) the minimum age will probably be 65. Oh well at least I love my job.
@@yeahyeahblah Then it's going to rise to 71 in 2046.
hello
So can I have my cake (Swiss roll) and eat it too?
No.
Does Martin appear on one program complaining to Government regarding the poor and the cost of living crisis and then appear another program helping retired military to pay less tax? Is he in it for the brand of Martin? Class discuss🤔
Not much said about Old people I have paid tax for 20 years on my pension - what was given when working is taken back when you retire.
You paid 0% tax on the way in, paid 0% tax on the gains, you can control the amount of tax paid on the way out and your estate will pay 0% inheritance tax on it.
It’s literally the most tax efficient way to save, and is one of the most generous pension schemes in the world
It isn't what's given is taken back at all. Even if you're a basic rate tax payer when contributing and withdrawing. If on Monday you paid £100 into a pension you would get tax relief increasing it to £125. If on Tuesday you withdrew the £125 you would get 25% of it tax free and pay 20% income tax on the remaining 75%. Essentially your £100 on Monday still gets you £106.25 on Tuesday so it equates to a 6.25% return. That's in one day, now add some growth over 20+ years and you're getting a lot more back out.
Martin should be chancellor 👌
So Martin is saying I can take out 25% tax free at age 55.
Then right before I retire, get myself onto a lower paying tax band and pay no tax on the rest of my pension? How do I get myself onto a lower paying tax band?
His comments about tax bands rather assume that you move from earning good money (in employment) to getting a relative pittance during retirement (because you're old, and don't need all that much income because you've paid off your mortgage and the kids have grown up and left home). The reality might not reflect this...
Treat your taxable pension like your salary. Do you want a 12k salary? Then it's tax free because of your personal allowance. Above 12k is 20% and above 50k is 40%.
So what's the return on your pension when compared to investing in the S&P500?
Your pension is a tax wrapper. You can invest in the S&P 500 in your pension.
Well you learn something new everyday! (I'm not a UK resident, hence my ignorance/stupidity). Thank you.
Would you not be better off investing outside your pension though in a tax free stocks and shares account as you won't be hit with the tax when you come to withdraw it?
Potentially. Depends on your exact circumstances. As a general rule, as the rules currently stand pension will be better from an absolute £ circumstance compared to an ISA, but it is more restrictive as to when you can access the money (but has other benefits e.g. in relation to UK inheritance tax). Laws are always changing in the UK, so who knows what it will be like in the future!
You get tax rebate when you add money to a pension, but it is also taxed when you take money out. You can take out 25% of the money free of tax within a tax allowance of £1M. Confused? I think you should be. Seems to me that the biggest beneficiaries of the tax rebate are the pension providers, who get larger fees for handling more money.
I hope this helps. Sticking with everything being in the 20% tax rate :
Putting money in : You pay in £80. The government adds £20. Your account has £100.
Taking money out : You withdraw £100, before tax. £25 is tax free. £75 is taxable (at 20% = £15). So, your take home amount is £85, which is £5 more than you put in.
Additionally, if this particular pension income is your sole income, you will get, at the current position, £12,570 entirely tax free. So, you could possibly withdraw up to slightly over £16,000 and not pay a penny in income tax. This is exactly what I did from the ages of 55 to 59.
So, the total benefit should always be there, but it depends on your circumstances in any given year how beneficial it is.
An average year ought to return an investment gain that more than outweighs inflation plus charges. Though this can't be guaranteed.
@@timg1246 my point is for every £80 of fees the pension company would have got without the tax rebate, they get £100 with it. That’s 25% more!
@@WJ1043But yours till end up with more.
@@timg1246sorry please can you explain how you were able to draw £16k tax free? Thanks 🙏
@Gilly-gx8rt You withdraw £16,760 in total from your pension. One quarter of that is tax free. That is £4,190.
£12,570 is the lower tax threshold. Below that you pay no income tax.
So, the mathematics of it is that you deduct the £4,190 from the £16760 and you get £12,570. So, no actual tax is due.
That only holds true if you have no other taxable income. It can be confusing.
I don’t understand what Lewis is telling people, whether you are working or retired you still paid tax at 20% and higher depending on pension income. The only thing you don’t paid is national insurance. Typically, the state old age pension covers the tax free paid allowance and private pension is taxed as usual like earned income. This means the max you will get is 80 pence per pound to be taxed again at 20% vat and what other taxes to be paid like council tax, fuel tax etc. There’s no free lunch for pensioners just the same as when you were working. The private pensions are very dependent on the countries’ economy so taxing business profits like labour are expected to do will not benefit workers, will damage their pension pots and later retirement prospects. There is no doubt that increasing government spending will lead to higher inflation and interest rates. Long term taxing business more will lead to higher government social spending.
What he’s telling you is that if you’re still working at 55 you can take the tax-free bit and keep the taxable bit untouched for now. Consider the two scenarios:
Let’s say you’re earning £30k at age 55 and could take £10k from your pension; the whole lot will be taxed at 20%.
However if you leave it until you’re 58 and not working anymore, and you take £10k from your pension, you are still under the tax-free allowance of £12.5k, and so the entire £10k is tax-free.
Basically, if you can afford to not take the money immediately, it might be more tax efficient to take it later.
You are right, the reason why his explanation won't apply to as many people is because you typically take your pension WHEN you stop working. If you're already working, you most likely don't need extra money. The 2nd option is really if you need the cash to buy a house/car or go on an expensive holiday for example.
Put it in gold and silver and you will double it…
Gold and silver have delivered growth far below the stock market, on average.
Not necessarily. It depends on what the market's doing, and, if the economy's doing badly, it's more likely to be worth doing, but one should NEVER think of yourself as an ecomony guru. That's how so many have lost their life savings before.
By the time I retire £1000 will be the same as a £100 today
Then you need to invest within your pension in a manner that will overcome that inflationary effect, ie a higher proportion in equities….maybe even 100%.
Can someone explain how 3% of £100 is £60?
It’s not. I think you misheard something.
Aren’t you taxed when you take the money out? So what’s the point in mentioning the tax break
Because the 20% tax break you are getting today invested for possibly 40 years will have compounded inestimably so you won't be paying back anywhere near after tax at that end what it has grown to.
The compound interest gained on your larger tax free sum allows with compound interest very good growth over 40+ years.
If you save £50 a month for 40 years earning an average 5% per annum you will have £40-50K compared to £24K put in
It shows if your in a work scheme with auto enrolling under standard deductions 4\3\1% where 4% is your deduction the tax relief makes that 5% eg £80 becomes £100, company pays £60 the company payments and the tax relief means your contribution doubles immediately. Then add 40+ years of compounded interest and further contributions ( which will grow as your wages grow) and things look a lot rosier for you as a pensioner. This is addition to any state pension
@@guyr7351 I kind of get it, it’s all very confusing!
We have the eorst pension in the western world
So put money away for day 30 years . Hopefully you will have a lump sum. ? Do you think Taxes will increase in 30 years or decrease. . !!
problem with pensions is that it dose not keep up with inflation,the money you get is only worth a quarter by the time you retire.
Umm….. if you invest in a global index stock tracker you would not only keep up with pension but make 5 to 7% on top over the long term. Just need to have the stomach to handle the shorter term volatility
This depends purely on what the inflation rate is. Most pension companies show illustrations of growth based on 5% pa growth which many exceed, easily on average.
Different in periods of high inflation like we have recently experienced.
Your figures are simply wrong. The stock market, even allowing for fees, over rtme, usually exceeds inflation.
If you don’t wake up you won’t be getting one in the future
Yeah put money in you pension and let the goverment tell you when you ca retire 🎉
@KevinOLoughlin-ys5ef what happens if due to a circumstance/life change retiring at 50 makes more sense ( ill health , life changing experience, ill health of spouse.....), you may be lucky and be able to do it at 58 which was your plan. But what happened to the people who's plan was 55...... now there new plan is 58 which was not originally their choice......
Don't mind Cat she's just having a seizure 🤣🤣🤣
So, a couple of things here. This promotes the non-state pension, which seems to be getting done away with in favour of pensions that one should carefully research so as to get what is agreeable for them. Also, as much as he is stating the massive amount that is possible to gain, depending on when you take said non-state pension, inflation can and will eat into this. Additionally, depending on the level of income (unless there is a change in government taxation policy) you will then be taxed on already taxed income and their gains. If one takes the most recent set of events and assumes someone is or will be of pension age very soon, then inflation and taxation will have eaten quite heavily into your pension. Although currently there is a somewhat reasonable level of interest to be gained presently for savings, with the current state of inflation many will barely have extra cash laying around to gain from this (and some are quite frankly living paycheck to paycheck). One last nugget to add, your pension may be assisting very large corporations that are making rather large gains.
Why does no one mention the fact you get taxed when you take it out of the pension?
It’s not tax free
You only get taxed if you’re taking more than 25%. Take out 25% then put rest in drawdown investments or annuity until you stop working and then take 25% again because you’re no longer a tax payer so its tax free.
At 4.50 he clearly says 25% of your pension is tax free and that the rest is subject to income tax. If you have no other income except a defined contribution pension draw down you £16K per year tax free because 25% is £4K and the remaining £12K is below the single person's tax allowance.
This only applies if you do not get a state pension. If you do get a state pension most of your personal allowance is used up by that.
If you have no other income you can take £12,570 tax free plus a further 4k as part of your 25% Tax free allowance.
@@patmartin9727 Lucky pensioners!
Yeah, because employers have unlimited money to waste on employees !
Waste?
Didn't know this programme was still going. Looks very dated.
I'm becoming more convinced every day that for anyone under the age of about 45 pensions are now a complete waste of time 😢
No, quite the contrary. The younger have the opportunity to invest for longer thereby benefitting more due the compounding of returns over a longer period. The basic maths proves this.
What happens if you die pension age. Government keeps it.
Pension always asked you to nominate beneficiaries! Pension have some forms of exemption from inheritance .
i think he dyes his hair to look younger than he is.........
Martin Lewis makes money out of the not so savvy public..... He tries to be a modern day robin hood.. but in my opinion that is not the case...
That’s if I’m not dead at sixty eight
Average uk life expectany is well into the 80s and you can claim DC pensions from 55 or 57.
Depends on the type of pension, if it's like most where you pay in it will go to your designated alternate without tax. If it's a defined benefit pension they normally have some reduced rate to who you choose e.g. 50%. So while you may not have got the benefit, you pass it on to someone else you want e.g. partner/child etc
Given you can't help when you time is it is far more scary to be alive and not have enough money then to die with a pension that you can pass on to loved ones
@@karmanline2005 sorry to sound morbid. I don’t want to live beyond … and end up in a care home ✌🏼❤️
You can take your private pension out 10 years earlier, so hopfuly you'll still be with us at 58.
Private pensions are taxable. If you cash them in you pay tax. If not earning at the time you can claim the tax back. By the time the company takes their costs out of it. You would be better of putting it in a cash ISA you don’t pay tax on ISA’s. Save your own money, take care of your own finances.
You have already paid tax on the money you are paying into the ISA. The benefit of paying into a pension is that you can save pre-tax, neither the investment nor the gain is subject to tax.
WRONG, WRONG. You get tax relief going in. More money in, the FASTER it grow. Its does get taxed on the way out. But your still better of than an equivalent ISA. Do a combination of both.
You don’t have a clue what you’re talking about. My pension grew 20.29% last 12 months, I paid 0.4% in fees. Cash isa is like 4.7% if you’re lucky.
You have to balance. You can withdraw from an isa at any time but can only put in £20k per year and this could change depending on government policy. The money in your pension can’t be touched until 55.
As mentioned, paying into a pension you get 20% or 40% tax relief plus any matching from your employer.
An isa will grow at ~ 5% per year tax free.
You will already be ahead at least 20% in your pension.
Have to disagree, pensions are a great way of saving for later life - the real issue is that successive governments keep messing with them and changing the rules. I can absolutely see in the future them coming for our pensions to help pay to cover up their utter ineptitude. 30% of my monthly salary goes into my pension but I only put in 17% as the rest, 13% is put in by my employer - thats essentially free money.
It’s a bit crazy to pass up on a deal like that….also because I’m using salary sacrifice, the hit on my take home pay is far less than it would be if I was putting that same amount into an ISA, although I also do have an ISA too.
If you're under 40, you would be insane put anything in a pension. Zero chance of ever seeing a penny of it.
Why
Labour will tax your pension, easy.
Oh and the Tories didn't? The last 16 years, buddy. We'll NEVER forget them.
As Brown did.