Tax concessions

Tax relief on your contributions

Your contributions, including AVCs, are taken directly from your salary and paid into the pension scheme. You get tax relief on your contributions at your highest marginal rate straight away.

As an example if you pay £50 a month, 20% of this is given as tax relief so you will actually only be paying £40 a month, assuming you pay tax at the lowest rate. The net cost will be even lower for higher rate taxpayers.

Tax-free cash

At retirement you have a one-off opportunity to exchange some of your taxable pension for tax-free cash. You may wish to invest part or all of your cash outside the pension fund to top up the income from your pension, although this is unlikely to replace the pension you have given up.

Cash death benefits

The trustees have discretion over the payment of cash death benefits. This is to ensure that no inheritance tax arises. To help the trustees decide who to make the benefits payable to please make sure you keep your Expression of wish for lump sum death benefits form up to date. You should also make sure that you have signed a will.