If you have a private pension is money then deducted from a state pension?
My mum (who doesn't have internet so i'm asking) is with a company and gets a stake holder pension and she was told that its not worth paying money into it as money would be taken out of her state pension. Neither of us really understand and any help would be appriciated.
If your Mother's total income is below the level of the Minimum Income Guarantee at retirement, her income will be made up to that level by the Government. This presents the question: if her income is going to be made up to that level anyway, is it a waste of time saving into a stakeholder pension?
For this reason, those people affected receive a Pensions Credit for their stakeholder pension savings, taking their income above the level of the minimum income guarantee.
Savings from a stakeholder pension will not affect the income from the basic state pension.
If your Mother's employer is offering to pay into the pension it is important to join the scheme as otherwise she is turning down "free money".
Disclaimer:
The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances. To find an IFA please go to http://www.unbiased.co.uk
Danny Cox, Certified Financial Planner CM, Hargreaves Lansdown, www.H-L.co.uk
