HMRC contributions to personal pension plans

bendix

Guys, I wonder if you can help me? I have a particular question but it might help by describing my situation first.

I am a 44 year old UK citizen currently working overseas (in Thailand). Prior to that, I was living and working in NZ and Australia. I have recently been offered a job back in the UK for around 150,000 a year plus bonus, and they will also contribute 9% extra to a private pension plan.

In terms of assets I have the following:

A mortgage free apartment in Bangkok (worth around 100,000 sterling).
Around NZ$750,000 or 300,000 sterling in NZ deposit accounts generating around 8% tax free.
Around 22,000 sterling in share-based unit trusts with ING
Around 10,000 sterling in a compulsory personal pension plan in Australia (the result of working there for two years)
Around 10,000 sterling in cash.

My objective is simple. I will work in the UK for 4-5 years and then retire back to Thailand. For this reason I have absolutely no interest in the S2P pension. For the sake of completeness, I have 11 years of National Insurance Contributions in the UK and will consider backpaying to get to the 30 years maximum to qualify me for the Basic Pension which, I understand, will be paid out when I am 65 and I am eligible for even if living overseas.

Here is my question:

I want to build a decent UK based private pension sum as quickly as possible. I am planning to contribute a minimum of 20% before tax earnings, in addition to my employers contribution of 1125 pounds per month. According to my sums, this will total around 3,800 per month.

However, I have also read that if I opt out of S2P, HMRC will contribute money to my private pension plan also. Is this true? Based on the numbers above, how much will they contribute, and how does it work?

Any advice would be appreciated. Thanks.

By the way, I'm aware of the debate on opting out, especially at my age. Given my plans, I have no interest in S2P. I'm also aware of the plan to withdraw the opt out option by 2012.

Finally, I know that I will not be able to access any private pension plan capital until I am 55.

EdInvestor

bendix wrote: »

My objective is simple. I will work in the UK for 4-5 years and then retire back to Thailand. For this reason I have absolutely no interest in the S2P pension. For the sake of completeness, I have 11 years of National Insurance Contributions in the UK and will consider backpaying to get to the 30 years maximum to qualify me for the Basic Pension which, I understand, will be paid out when I am 65 and I am eligible for even if living overseas.

It's hardly worth you bothering to contract out, the rebate is probably not much more than 1k a year.If you allow it to accumulate as part of your state pension, it will reduce the number of back years you need to contribute to get up to 30. BTW buying NI contributions (towards the basic state pension) is a bargain if you are an expat, as you can can pay voluntary class 2 contributions, at less than 10GBP a month.