Most of us make it or focus on working hard so that when we retire, our pension can take care of us. At times, choosing the best pension for LTD company directors can be difficult, but we help you narrow your choices with this FAQ guide.
Can I have more than one pension?
Yes. You can have as many directors' pensions for business owners as you wish. However, it is essential to ensure that you do not pay more than the maximum allowed premium yearly.
If I die after retirement, what happens to my pension fund?
If it is before age 75, your fund will be paid to your beneficiary. They will get a tax-free lump sum or income. If it after age 75, it is paid to the beneficiaries tax rate. When there is an annuity, you select the death benefits that will go to the outset, and every chosen benefit decreases the expected income payment.
Is there an age limit to start the pension?
There is no minimum age requirement. You can start a pension even for a newborn. However, they will not access the funds until they turn 55 years or choose to retire. This also shows that you are not required to be working to be part of a pension. You need to make a yearly payment of 3600 pounds.
How much do you pay?
The amount you pay depends on when you start and how much pension you would like to receive when you retire. You can look into nearby pension options for limited company directors to help you. As earlier discussed, if you are not working or your pension started as a newborn, you can pay 3600pounds. Currently, you can pay up to 40,000 pounds per tax year or whatever much you earn or expect to earn from a tax year if it is less than 40,000 pounds.
What is a 'carry forward' contribution?
If you have earned more than 40,000 pounds and you did not pay the maximum pension previously in a year or more, then you can pay more than the year's maximum. The extra amount you pay covers the previous year's pension and can be paid using the previous year's allowances.
How do I get tax relief for my pension payments?
The pension company you select will claim 20% tax relief from HMRC when they receive your contribution. Extra relief for higher rate taxpayers gets claimed through your tax returns,
What is auto-enrolment?
It is a compulsory pension which employers have to give their employees. An employee can have this auto-enrolment alongside their other pension. In most companies, as long as you are under contract, your employer is obligated to auto-enroll you.
If I have several pensions, can I merge them into one pension?
Yes, it is possible to merge them. However, this depends on the company since come pensions have safeguarded benefits which upon transfer will get lost. Some company director pension has a comparison tool that establishes whether merging all your pension is a wise idea or not.
Please call Revenue for a free consultation.