Tax advice of the week: get a 12% return on a pension

Savers aged 50 to 75 can still earn a guaranteed return of up to 12%, by investing in an 'immediate vesting pension'.

The banks may be offering derisory interest rates, but older savers (aged 50 to 75) can still earn a guaranteed return of up to 12% a year, provided they are prepared to tie up their cash for life, says John Greenwood in The Daily Telegraph.

How? By investing in a pension that lets you draw benefits immediately, known as an immediate vesting pension. The "eye-catching rate of return" comes from a combination of tax relief, a tax-free cash lump sum, and income from an annuity. And the older you are the higher the rate of return as you are likely to receive fewer future annual payments.

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