Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one year’s time at age 66. Her salary is currently £55,000. Throughout her enrolment in the scheme, she has paid in 8% of salary, and this has been topped up by employer contributions and tax relief worth 4% of salary. She will also qualify for a state pension of £9,000 per year. If, instead, Alice retires (at age 66) by putting her whole pension fund in a drawdown scheme (with annual income at 33% of her pre-retirement gross income), how much income would she have available to spend in her first year of retirement?
Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one year’s time at age 66. Her salary is currently £55,000. Throughout her enrolment in the scheme, she has paid in 8% of salary, and this has been topped up by employer contributions and tax relief worth 4% of salary. She will also qualify for a state pension of £9,000 per year. If, instead, Alice retires (at age 66) by putting her whole pension fund in a drawdown scheme (with annual income at 33% of her pre-retirement gross income), how much income would she have available to spend in her first year of retirement?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one year’s time at age 66. Her salary is currently £55,000. Throughout her enrolment in the scheme, she has paid in 8% of salary, and this has been topped up by employer contributions and tax relief worth 4% of salary. She will also qualify for a state pension of £9,000 per year.
If, instead, Alice retires (at age 66) by putting her whole pension fund in a drawdown scheme (with annual income at 33% of her pre-retirement gross income), how much income would she have available to spend in her first year of retirement?
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