Pension MoneySaving: Buy a different way to boost returns Article Discussion Area

jem16

matthewg156 wrote: »

I guess you may be able to 'salary sacrifice' a bonus lump sum, as you pay NI on your bonus, don't you?

Yes you do.

In fact, is there any difference between a bonus payout and a regular salary?

Not in terms of overall remuneration.

However whether a lump sum is treated differently for salary sacrifice contributions is something you would need to check at work.

atush

Matthew,

If you don't have any cash buffer for emergencies that you describe, the best thing would be to put the bonus in a Cash ISA. If you have savings outside a pension, and they are 6 months or more salary, then go ahead and invest some of your bonus (or all) in a pension. What we normally do is put some of any bonus in pension, then put the rest into savings. This way you have money for emergencies, but also save for retirement and save on tax.

matthewg156

atush wrote: »

Matthew,

If you don't have any cash buffer for emergencies that you describe, the best thing would be to put the bonus in a Cash ISA. If you have savings outside a pension, and they are 6 months or more salary, then go ahead and invest some of your bonus (or all) in a pension. What we normally do is put some of any bonus in pension, then put the rest into savings. This way you have money for emergencies, but also save for retirement and save on tax.

Makes sense. I may put enough in the pension to reduce my adjusted income to below the £100,000 level and thus gain the personal allowance, and then put the rest into an ISA.

JungleJim1

It says to Save half of your age as a percentage of your salary when you start your pension, does that mean your "take home" salary after tax etc etc?

jem16

JungleJim1 wrote: »

It says to Save half of your age as a percentage of your salary when you start your pension, does that mean your "take home" salary after tax etc etc?

No it means your gross salary.

dunstonh

JungleJim1 wrote: »

It says to Save half of your age as a percentage of your salary when you start your pension, does that mean your "take home" salary after tax etc etc?

It doesnt make any difference really. It is such a rough guide to begin with that using it to fine tune isn't realistic. i.e. it doesnt take into account your chosen retirement age, your chosen retirement income level, type of investment you are using etc. it is purely designed to get you thinking of a sensible contribution and not a ridiculously low one that far too many people pay.

If you are not going to do a more accurate shortfall analysis then work on gross basis. However, do try and do a more accurate analysis if you can. To prepare what should end up the most expensive purchase in their life on a throw away line is not sensible planning.

dopeydinni

I have a stakeholders pension and I have insurance on it. Do I really need it? I was told that it would help me if I became seriously ill! Please help!

dunstonh

I have a stakeholders pension and I have insurance on it. Do I really need it?

we dont know your financial circumstances. So, we cant answer it.

The only two insurances available on pensions are life assurance or waiver of contribution. It sounds like waiver. That will help you if you if you become long term ill as your pension contributions will be met.