Should I top up my pension this year even if it moves me into the higher tax bracket?

11 February 2021

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Question by Powell

I have a pension pot of approximately £600k. I already receive my deceased wife's NHS pension of approximately £20K PA. I could top up my pension this year with three years worth of credits, adding approximately £50K to the pot, but I am not sure it is worth it if I will move into the 40% tax bracket when I do take my own pension (57 now).

Answered by Carla Brown

Hi Powell, Thanks for your question.

It is very difficult to answer this question without having all the facts to hand and it sounds as though you really do need some specialist financial advice. Things that should be considered are your current tax status, your tax status in retirement, your other assets, the type of pension you have and the projected benefits, your own health situation, your wishes as to what happens to your pensions on your death. There are many benefits to having funds in pensions and you will receive tax relief on the contributions so this would need to be weighed up against the potential tax situation when you draw down benefits at your selected retirement age and taking all the above factors into account also.

I would urge you to take ‘full fat advice’ and sit down with someone who specialises in pensions to look at your whole financial situation from all angles.

Answered by

Carla Brown

Founder and Managing Director

Carla is the founder and Managing Director of Oakmere Wealth Management Ltd which is a growing practice on the outskirts of Chester.