Pension contributions

Froggitt

I currently have a very low (basic rate) salary income but a very high (top rate) dividend income.

Presumably I can make upto £3600 contributions to a stakeholder, but can I pay in more i.e. upto 17.5% of my dividend income?

Froggitt

.....Anyone?

EdInvestor

Hi Froggitt,

AFAIK dividend income does not count for pension contributions or NI, so it might be sensible to check your state pension situation if you haven't got that in hand already.

Others however will be much better informed in this area than me

nrsql

I'm in a similar situation and am thinking of starting a pension shortly.
The dividends don't count so I think 3,600 will be the max.

Go and see a financial advisor (or several - that's what I'm going to do). Doesn't cost anything for advice except time and if you're anything like me your financial affairs will be fairly complicated and they may have some other ideas.

Froggitt

I dont think it does either Ed - however Im fairly sure that my low salary income is counting towards NI and state pension contributions. What I wanted to do was top up the stakeholder above £3600 with voluntary additional contributions as theres no employer contributions going into it, and Ive made very little personal pension provision over the past three years or so.

Any IFAs out there with any thoughts on this?

whiteflag_3

nrsql wrote:

Doesn't cost anything for advice except time .

Thatll be right!

How do you propose to get advice for free ?

whiteflag_3

EdInvestor wrote:

Hi Froggitt,


Others however will be much better informed in this area than me

Im lost for words :T

yesbutnobut

Froggitt wrote:

I currently have a very low (basic rate) salary income but a very high (top rate) dividend income.

Presumably I can make upto £3600 contributions to a stakeholder, but can I pay in more i.e. upto 17.5% of my dividend income?

Hi Froggitt,

I'm in a similar situation (low salary, high dividends). I'm currently the only employee, director and shareholder of my limited company. I pay myself a low salary and high dividends.

I'm obviously unaware of your circumstances but here's what I do ...

Under the current pension regulations (i.e. before 'A Day' April 2006), I am using a previous year as my 'basis year', choosing a year when I was employee and was paid a large salary (I believe you can go back up to 5 or 6 years). I am paying pension contributions based on this salary in this year, direct from my limited company hence reducing the profit (and therefore corporation tax) of my company.

Anyway, I'm fairly sure this will all change on 'A' day ...

EdInvestor

whiteflag wrote:

Im lost for words :T

So I see. No help to Froggitt at all