It is never too early to save extra for retirement, and AFPS15 makes it easy for you to improve your pension by purchasing Added Pension. So each day this week we give you answers to some common questions about the Added Pension provision under AFPS15.
Today’s question is…
Q. Can you give me an example that will make sense to me?
A. A member who joined at age 20 takes out the Added Pension contract at age 38 to purchase £100 Added Pension per year. Here, the member’s age on joining, age at the point of purchase and his or her State Pension Age (which is 68 in this case) have a bearing on the cost:
If member’s benefits only are enhanced the cost would be £1,566 as a lump sum or £133 per month for 12 months.
If member’s and the dependants’ benefits were enhanced the cost would be £1,687 as a lump sum or £144 per month for 12 months.
This may look like a lot of money but, remember, premiums come from pay before tax, thus reducing the member’s tax liability. For example, using the figures above, if the member was a basic tax rate payer, the £1,687 would, effectively, become £1,349.60 and the £1,566 would become £1,252.80.
Check back tomorrow for the next question in this Q&A series