Can I do what I want with a one off pension contribution?

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Armelius
Tue, 06/04/2010 - 17:59

I am only going to be receiving three pay checks from my current employer so they suggested writing me a check for the pension contributions at the end of my employment. My question is: What am I allowed to do with that check? Can I keep it if I pay normal income tax on the amount? Do I have to put all of it into some pension scheme? If so, how soon? Can I just put it in an ISA? Other alternatives? Any help is much appreciated.

Thanks

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petematthew:

HI Armelius

Is your employer repaying you for your pension contributions you have already made? That's quite usual if you have been a member of the scheme for less than two years, though it does depend on the kind of scheme. If this is the case, then any money you receive will have tax taken off it, effectively to repay the tax relief you had on making the pension payments

I presume you are being made redundant? Or just coming to the end of a contract?

Perhaps you could give me a little more details and I might be able to help you further.

Pete

Sun, 18/04/2010 - 22:04
Armelius:

Hi Pete,

Thanks for your reply.

I am leaving to join another firm. The check I am getting is for the payments that should have gone into the company defined contribution scheme. Because I didn't have time to join the scheme, no payments have been made into it on my behalf, instead they offered to give me the money directly with my final paycheck at the end of May. I don't think they will have deducted tax so if I am allowed to keep it I guess I would have to pay the revenue directly?

Again, thanks for your help.
Armelius
 

Mon, 19/04/2010 - 07:42
petematthew:

HI Armelius

I'd say that your company should probably deduct income tax at source, but if they don't then yes, you'll definitely have to pay the tax on it. Once you've done that though, you can do what ever you want with the money!

Good luck in the new job

Pete

Mon, 19/04/2010 - 14:21
Armelius:

Good stuff, thanks Pete!

Mon, 19/04/2010 - 16:41