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buying extra pension
examples

Example 1
Joan wants to buy extra pension for herself, but not her dependants’. She is 40... here is the cost of buying £250 of pension, over various payback periods:
Cost over 1 year: 
£196.56 a month (less tax relief)
Cost over 5 years: 
£43.32 a month (less tax relief)
Cost over 10 years:  
£24.36 a month (less tax relief)
Cost over 20 years:
£15.24 a month (less tax relief)
Cost over 24 years: 
£13.84 a month (less tax relief)
(maximum payment period for Joan)
So if Joan buys £1000 of pension and spreads the cost over 20 years, it will cost her £60.96 a month. If Joan was a taxpayer at the basic rate of 20%, this would bring down the cost to £48.77 a month.



An introduction to buying extra membership

Example 2

Pete wants to buy extra pension for himself, and also his dependants’. He is 30... here is the cost of buying £250 of pension, over various payback periods:
Cost over 1 year: 
£156.40 a month (less tax relief)
Cost over 5 years: 
£34.43 a month (less tax relief)
Cost over 10 years:  
£19.33 a month (less tax relief)
Cost over 20 years:
£12.03 a month (less tax relief)
Cost over 24 years: 
£9.38 a month (less tax relief)
(maximum payment period for Pete)
So if Pete buys £1000 of pension and spreads the cost over 20 years, it will cost him £48.12 a month. If Pete was a taxpayer at the basic rate of 20%, this would bring down the cost to £38.50 a month.

Example 3

Yvonne wants to buy extra pension for herself, and also her dependants’. She is 50... here is the cost of buying £250 of pension, over various payback periods:
Cost over 1 year: 
£269.09 a month (less tax relief)
Cost over 5 years: 
£59.53 a month (less tax relief)
Cost over 10 years:  
£33.69 a month (less tax relief)
Cost over 14 years: 
£26.53 a month (less tax relief)
(maximum payment period for Yvonne)
So if Yvonne buys £2000 of pension and spreads the cost over 14 years, it will cost her £212.24 a month. If Yvonne was a taxpayer at the basic rate of 20%, this would bring down the cost to £169.79 a month.

 

 

 

 

 

 

 

 

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