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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: 
£192.56 a month (less tax relief)
Cost over 5 years: 
£42.77 a month (less tax relief)
Cost over 10 years:  
£24.52 a month (less tax relief)
Cost over 20 years:
£16.41 a month (less tax relief)
Cost over 24 years: 
£15.41 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 £65.64 a month. If Joan was a taxpayer at the basic rate of 20%, this would bring down the cost to £52.51 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: 
£136.73 a month (less tax relief)
Cost over 5 years: 
£30.21 a month (less tax relief)
Cost over 10 years:  
£17.18 a month (less tax relief)
Cost over 20 years:
£11.17 a month (less tax relief)
Cost over 24 years: 
£9.35 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 £44.68 a month. If Pete was a taxpayer at the basic rate of 20%, this would bring down the cost to £35.74 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: 
£272.17 a month (less tax relief)
Cost over 5 years: 
£61.74 a month (less tax relief)
Cost over 10 years:  
£36.75 a month (less tax relief)
Cost over 14 years: 
£30.46 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 £243.68 a month. If Yvonne was a taxpayer at the basic rate of 20%, this would bring down the cost to £194.94 a month.

 

 

 

 

 

 

 

 

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Pensions Office, Concord Suite, Manchester Road, Droylsden , M43 6SF Helpline: 0161 301 7000 Email Us: mail@gmpf.org.uk