tax credits and pensions

saving-mad

we have been on tax credits since the new scheme came in and earlier this year i discovered if we payed more into my husbands works pension our tax credits increased (by about 50% of the extra we were paying) because he took a drop in his wages due to it been diverted to the pension.
Ever since i have wondered about setting up my own pension. (i am 32 and self employed)
does anyone know the best sort of pension and how much it is advisable to put in, also if it is disregarded as income for tax credit purposes.
any thoughts appreciated

dunstonh

does anyone know the best sort of pension and how much it is advisable to put in, also if it is disregarded as income for tax credit purposes.
any thoughts appreciated

Best pension would depend on your circumstances. For some people, it would be stakeholder, for others it would be personal pension and for others a SIPP or hybrid SIPP.

Looking at the provider or type first is the wrong way to go about it. You need to look at where you want to invest first, then pick the product version that allows that.

A stakeholder will be a basic option but increasingly, its proving not to be the best option. However, that would really depend on what you want and expect from this investment.

Any contributions you make will reduce your income as far as tax credits are concerned. Depending on your entitlement, this may well increase the amount you get back.

saving-mad

thanks for that, hubbies pension is all set up via work and i have no idea where to start. All i know is that i should be doing something sooner rather than later and it must be flexible i.e. what i say i can afford now may not be the same in a couple of years, i think he pays £250 month on £14,000 a year wages and i was thinking something simular, but dont know if its the best thing to do with all the bad press on pensions.

dunstonh

but dont know if its the best thing to do with all the bad press on pensions.

There is no bad press on pensions. There is bad press on the potential pensions crisis that will occur if people dont plan for their retirement. About 50,000 people are affected by problem pensions at present yet the media have given the impression that its closer to 50 million!

exil

The real pension crisis is that experienced by current pensioners living on the state pension or even less. The average pensioner household has a disposable income less than 50% of non-pensioner, and yet we are being asked to aim at 75% for future pensions! Unrealistic.