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  • FIRST POST
    • typeractive
    • By typeractive 5th Sep 17, 9:21 PM
    • 823Posts
    • 350Thanks
    typeractive
    Quick question
    • #1
    • 5th Sep 17, 9:21 PM
    Quick question 5th Sep 17 at 9:21 PM
    Hi all,

    I've searched around for this and think i might be phrasing it incorrectly into google , if I get a job that earns more money, do I benefit from that when I reach retirement? I.e. will my state pension be higher? (the more you pay in the more you get back?).

    Thanks!
    "The future needs a big kiss"
Page 1
    • molerat
    • By molerat 5th Sep 17, 9:48 PM
    • 17,669 Posts
    • 11,935 Thanks
    molerat
    • #2
    • 5th Sep 17, 9:48 PM
    • #2
    • 5th Sep 17, 9:48 PM
    Not any more. The new 2016 pension gives you, at current rates, £4.56 pension for each year contributed up to a maximum 35 years and £159.55 per week irrespective of how much (over the minimum) you earn. There is of course transitional arrangements for pre 2016 pension earnings but if you had less than the maximum at April 2016 then the maximum new pension figure is all you can achieve.
    Last edited by molerat; 07-09-2017 at 9:58 AM.
    www.helpforheroes.org.uk/donations.html
    • enthusiasticsaver
    • By enthusiasticsaver 5th Sep 17, 10:04 PM
    • 5,152 Posts
    • 9,797 Thanks
    enthusiasticsaver
    • #3
    • 5th Sep 17, 10:04 PM
    • #3
    • 5th Sep 17, 10:04 PM
    Your state pension won't be but your occupational pension might. You need to check the scheme and benefits. I don't know about you but our retirement financing is based 75% on occupational pensions/savings and only 25% state pension and we retire(d) 8 years earlier than state pension age.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Mnd
    • By Mnd 6th Sep 17, 7:15 AM
    • 339 Posts
    • 354 Thanks
    Mnd
    • #4
    • 6th Sep 17, 7:15 AM
    • #4
    • 6th Sep 17, 7:15 AM
    You could also open a SIPP or personal pension and pay additional money into that
    • xylophone
    • By xylophone 6th Sep 17, 10:52 AM
    • 24,011 Posts
    • 14,026 Thanks
    xylophone
    • #5
    • 6th Sep 17, 10:52 AM
    • #5
    • 6th Sep 17, 10:52 AM
    http://forums.moneysavingexpert.com/showthread.php?p=71233118#post71233118

    Your workplace pension is currently LGPS and you were formerly in TPS?

    https://www.yourpensionservice.org.uk/news/?id=2015/08/21/79649&news=882&page=pr&_

    Have you obtained a new state pension statement?

    https://www.gov.uk/check-state-pension
    • typeractive
    • By typeractive 6th Sep 17, 2:15 PM
    • 823 Posts
    • 350 Thanks
    typeractive
    • #6
    • 6th Sep 17, 2:15 PM
    • #6
    • 6th Sep 17, 2:15 PM
    Thanks all!

    Yes I was in the TPS, and now LGPS. I know my employer pension is better as the both the salary % contribution is higher, though it was the State Pension I was most interested in. I'd thought "higher earners pay more in, so get more out".

    Some salaries literally end up with you paying out a lot more in tax and NI, but very little benefit to yourself (Yes I'm sure this is well known, but I've never really considered it!). I'm officially growing up and becoming grumpy!
    "The future needs a big kiss"
    • AlanP
    • By AlanP 6th Sep 17, 9:19 PM
    • 1,045 Posts
    • 746 Thanks
    AlanP
    • #7
    • 6th Sep 17, 9:19 PM
    • #7
    • 6th Sep 17, 9:19 PM
    Thanks all!

    Yes I was in the TPS, and now LGPS. I know my employer pension is better as the both the salary % contribution is higher, though it was the State Pension I was most interested in. I'd thought "higher earners pay more in, so get more out".

    Some salaries literally end up with you paying out a lot more in tax and NI, but very little benefit to yourself (Yes I'm sure this is well known, but I've never really considered it!). I'm officially growing up and becoming grumpy!
    Originally posted by typeractive
    Taxes and NI are not meant to benefit the individual payer directly though so yes higher earners pay more than those that earn less.

    Personally I would prefer to be paying 40% tax as a higher earner than paying virtually no tax on a minimum wage job on balance
    • Silvertabby
    • By Silvertabby 6th Sep 17, 9:28 PM
    • 2,116 Posts
    • 2,816 Thanks
    Silvertabby
    • #8
    • 6th Sep 17, 9:28 PM
    • #8
    • 6th Sep 17, 9:28 PM
    Personally I would prefer to be paying 40% tax as a higher earner than paying virtually no tax on a minimum wage job Posted by AlanP
    Exactly. I'm now retired, although I don't get my State pension for another 4 years, and pay tax (20%) on some of my occupational pension income. Would I rather be in my position - or would I prefer to pay no tax because my income is too low. What do you think.
    Last edited by Silvertabby; 06-09-2017 at 9:33 PM.
    • marlot
    • By marlot 7th Sep 17, 6:19 AM
    • 3,204 Posts
    • 2,334 Thanks
    marlot
    • #9
    • 7th Sep 17, 6:19 AM
    • #9
    • 7th Sep 17, 6:19 AM
    T...Some salaries literally end up with you paying out a lot more in tax and NI, but very little benefit to yourself (Yes I'm sure this is well known, but I've never really considered it!). I'm officially growing up and becoming grumpy!
    Originally posted by typeractive
    As 50% of the population don't pay tax any more (with the higher thresholds and various credits), the country needs people like us to pay for everything!
    Last edited by marlot; 07-09-2017 at 6:21 AM.
    • Dorian1958
    • By Dorian1958 7th Sep 17, 6:28 AM
    • 116 Posts
    • 80 Thanks
    Dorian1958
    I wish I was paying higher rate tax too, then I would be shovelling a lot more into AVC's. Reminds me of a former boss who at his retirement do spent the entire time grumbling about the 40% tax take off his lump sum (somehow wangled redundancy which exceeded £30k), while the half dozen basic rate taxpayers present were paying for his dinner. Never did get a thanks afterwards either.
    • FatherAbraham
    • By FatherAbraham 7th Sep 17, 7:20 AM
    • 737 Posts
    • 561 Thanks
    FatherAbraham
    Taxes and NI are not meant to benefit the individual payer directly though so yes higher earners pay more than those that earn less.
    Originally posted by AlanP
    Your assertion about National Insurance is not really true. It remains in principle a contribution-based compulsory insurance scheme for workers.

    Warmest regards,
    FA
    • Malthusian
    • By Malthusian 7th Sep 17, 9:36 AM
    • 3,569 Posts
    • 5,483 Thanks
    Malthusian
    Your assertion about National Insurance is not really true. It remains in principle a contribution-based compulsory insurance scheme for workers.
    Originally posted by FatherAbraham
    In principle income tax is a temporary measure to pay for the Napoleonic Wars.

    His assertion about National Insurance is absolutely true. This is one of those cases where "in principle" or "in theory" means the opposite of "in reality".
    Last edited by Malthusian; 07-09-2017 at 9:39 AM.
    • steampowered
    • By steampowered 7th Sep 17, 11:07 AM
    • 2,064 Posts
    • 1,940 Thanks
    steampowered
    Some salaries literally end up with you paying out a lot more in tax and NI, but very little benefit to yourself
    Originally posted by typeractive
    If you are worried about paying too much tax, an excellent way around this would be to contribute into a private pension.

    That will get you more in retirement and will get you tax relief.
    • typeractive
    • By typeractive 8th Oct 17, 1:09 PM
    • 823 Posts
    • 350 Thanks
    typeractive
    If you are worried about paying too much tax, an excellent way around this would be to contribute into a private pension.

    That will get you more in retirement and will get you tax relief.
    Originally posted by steampowered
    Thanks steampowered - how does that work? Does the money come out of wages prior to Net pay? Which in turn will make the net pay less anyway.
    "The future needs a big kiss"
    • Dazed and confused
    • By Dazed and confused 8th Oct 17, 3:09 PM
    • 2,088 Posts
    • 940 Thanks
    Dazed and confused
    Personal pension or SIPP contributions are often paid out of take home pay and for most people they do not have any affect on the amount of tax you actually pay.

    Basic rate payer who pays £2000/year in tax will still pay £2000/year BUT they will get basic rate tax relief added to the pension so if you paid, say, £4000 into a SIPP then the pension company would add £1000 so your pension fund has £5000 in but it only cost you £4000.

    If you pay sufficient higher rate tax then the same £5000 in your fund could cost you just £3000. The original £4000 paid to the SIPP company and £1000 higher rate tax relief you can claim from HMRC.
    Note: You don't actually get a fixed £1000 from HMRC but the gross contribution of £5000 increases the amount of basic rate tax you can pay thus reducing the amount of higher rate tax you pay so often this is worth £5000 x 20% = £1000 (plus or minus any other tax owed/due back to you for any other reasons)
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