Pensions Planning: The NUMBER
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In July 2011 my wife and I took a 27-month career break at age 45. We had already paid off our mortgage and had £70K cash savings to fund our travels. We enjoy mountaineering, climbing and skiing and spent the summers in mainland Europe using a tent as a base. We spent the first autumn in Nepal and the second in Jordon. The winter's was split between Spain, Scotland and the French Alps. We didn't rent out our house as we enjoyed some of the time being at home and still wanted a base. We averaged just over £2K month for the 2 of us over 27-months including the costs of running our home and car. Now back at work our monthly spend has averaged £2500 over the past year due to the additional costs of a second car and long commutes we both endure. Our experience has shown us that we can enjoy a great lifestyle on £2K a month....roll on early retirement.0
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enthusiasticsaver wrote: »I am not sure it is worth paying into a dc pension 4 years before retirement on a part time wage.
Only you can judge that, but my wife puts her entire part time wage into a SIPP. Each £100 she puts in is turned in £125 by HMRC and she can take it all out tax free in four years time.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Oh, and this works well as she pays zero tax or NI on her salary but still gets tax relief going into a pension. Sweet.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
enthusiasticsaver wrote: »....
I am not sure it is worth paying into a dc pension 4 years before retirement on a part time wage. I overpay into my db pension to get the maximum tax relief (15% contributions on a LGPS) but years of part time working while my children were growing up have taken their toll on my pension so I have built up a cash isa fund which effectively works out at 4 years of my full salary. All cash isa savings are in my name along with the investment portfolio. My husband has not bothered with cash isas and just ploughed everything he can into his pension which has worked quite well really.
You are presumably paying zero tax through your pay. You could start a SIPP and contribute ((Gross salary -15%)*.8) into it and get tax relief add in by the government. You can then draw 25% tax free and up to £10k tax free when you finish. So tax relief on the way in, no tax on the way out and delay taking LGPS which will add back another 3-4% per year being docked for taking it early.0 -
You are presumably paying zero tax through your pay. You could start a SIPP and contribute ((Gross salary -15%)*.8) into it and get tax relief add in by the government. You can then draw 25% tax free and up to £10k tax free when you finish. So tax relief on the way in, no tax on the way out and delay taking LGPS which will add back another 3-4% per year being docked for taking it early.
Have I got this right? Even though I am paying hardly any tax (less than £20 per month from my salary) as I work part time and only just above the personal allowance if I invest in a SIPP the government will add 25%??I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
gadgetmind wrote: »Oh, and this works well as she pays zero tax or NI on her salary but still gets tax relief going into a pension. Sweet.
That does sound good. I have just started up a monthly investment into stocks and shares fund at the moment unwrapped as I have used my full isa limit for this year. In April I plan to transfer the fund into an isa but I am wondering if I should explore a SIPP instead? The only thing I have found is the charges seem to be higher for a sipp than a stocks and shares isa so wonder if this would outweigh the tax benefits.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
Yes.enthusiasticsaver wrote: »Have I got this right? Even though I am paying hardly any tax (less than £20 per month from my salary) as I work part time and only just above the personal allowance if I invest in a SIPP the government will add 25%??
You can invest the lesser of £40k or your salary pa, in your case less the payments to the LGPS. If you pay through your salary you are limited to the tax you pay but if you open a SIPP then the money is claimed by the provider from HMG. It is up to you to ensure you do not exceed your limit. It is a no brainer for those who have to fill a gap before payment of DB pensions.0 -
enthusiasticsaver wrote: »Also bear in mind you do not pay National Insurance on private pension income providing you are not also working. That makes a difference. With me working part time and the increase in the personal tax allowance I actually pay more in NI than in tax.
can anyone clarify this statement please?
the Pensions Advisory Service say on their website that NIC's are not payable on any pension income at all, even if you are working.
thanksTHE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is £26k pa)0 -
can anyone clarify this statement please?
the Pensions Advisory Service say on their website that NIC's are not payable on any pension income at all, even if you are working.
thanks
That's my understanding too.
http://www.thisismoney.co.uk/money/experts/article-2599697/Will-I-pay-National-Insurance-private-pension-income.html
"provided the income comes from a registered pension scheme or an income product bought with savings from a registered pension scheme, you won't have to pay National Insurance"
HHx0 -
the only problem is that this article assumes the person is not working though....Hopelessly_Hopeful wrote: »That's my understanding too.
http://www.thisismoney.co.uk/money/experts/article-2599697/Will-I-pay-National-Insurance-private-pension-income.html
"provided the income comes from a registered pension scheme or an income product bought with savings from a registered pension scheme, you won't have to pay National Insurance"
HHx
the question is: will a person aged 58, who continues to work and drawdown a pension pay nics on that pension?
thanksTHE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is £26k pa)0
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