How does pension tax relief work?
If you are a basic rate taxpayer (i.e. pay income tax of 20% on your income), you can receive 20% tax relief on any pension contributions you make subject to your annual allowance. The way this works in practice is that if you contribute £80 into a pension, the government will top this up with an additional £20 meaning your total contribution becomes £100.
If you are a higher or additional rate taxpayer you can benefit from 40% and 45% tax relief respectively but you have to reclaim the extra tax relief through your self assessed tax return as you will only receive basic rate tax relief on your mynestegg pension contributions.
Am I eligible for a pension with mynestegg?
To be eligible for a pension with mynestegg you must be a UK resident and UK citizen for tax purposes. You must also be at least 18 years of age.
What type of pension does mynestegg offer?
There are various types of pension schemes in the UK. The two most common schemes are:
1) Defined Benefit pensions
2) Defined Contribution pensions
At mynestegg we offer a Self-Invested Personal Pension which is a type of defined contribution pension, This means that your pension pot at retirement is dependent on how much you contribute and the growth of the investments within your pension.
What is my pension allowance?
There are various different allowances associated with pensions. The most common ones are:
Annual allowance: this is the amount you can put into pensions each tax year and is currently the higher of £60,000 or your annual UK relevant earnings, subject to a minimum of £3,600. All of these figures are inclusive of any tax relief you may be eligible for.
Lifetime allowance: this is no longer applicable but historically has restricted individuals to a maximum amount they can have in pensions.
Money purchase annual allowance: if you have flexibly accessed your pensions, you are restricted to a £10,000 annual pension allowance for new contributions.
If you have any further questions on pension allowances please speak with one of our team to discuss this in more detail.
How do pension withdrawals work?
mynestegg don't currently allow withdrawals from their pension product. This is something we are looking to introduce soon and if you are over the age of 55 and looking to access your pension, you will have to transfer out to a new provider.
When you come to access your pension in retirement, you can withdraw 25% of the account value tax free and the remainder is potentially subject to income tax depending on how much you withdraw each year.
What happens to my pension if I die?
The Government recently announced that as as of 1st April 2027 pensions will be subject to inheritance tax. If you were to pass away under the age of 75 prior to 1st April 2027, your pensions can still be passed on to your beneficiaries without being subject to inheritance tax. If you were to pass away after the age of 75 before the 1st April after the age of 75, your pensions can be passed to your beneficiaries but any withdrawals they take from your pension will be taxed at their marginal (highest) rate of income tax.
Can I transfer a pension if I've started to take benefits?
mynestegg doesn't currently offer a drawdown facility and as such doesn't accept transfers of pensions where benefits have been accessed (crystallised). This is something we are looking to introduce in the near future.
Can I change my mind about pensions?
Please refer to the Pension Key Features Document in your mynestegg Document Store.
With the mynestegg pension you have 30 days as a 'cooling off' period where you can cancel the contract with us once money has been added to your account and have your contribution returned. Please note that the money paid back to you will be the same as the value it is at the time of cancellation.
To cancel your pension please email [email protected] or [email protected]
Why is mynestegg better than my workplace pension schemes?
If you can benefit from auto enrolment or matched pension contributions from your employer, we would always recommend that you look into this first before contributing to a pension with mynestegg. Once you have reached the limit of matched contributions, mynestegg might then be a better provider than your workplace pension. This could be in relation to fees, accessibility, performance or simplicity.
What happens if I change jobs?
If you change jobs, this won't impact your mynestegg account. Instead you could look to transfer your old workplace pensions into your mynestegg account through the web portal or mobile app.