LGPS -extra contributions?

tali

I have a LGPS which i pay 6% of my salary -is it worth me making extra contributions - ie increase it to say 12%-or even more
On paper it seems an exceptional deal- £20 for every £80? iirc - but i don't notice people shouting this "giveaway" from the rooftops
I have used some calculators but i am none the wiser as my understanding of tax issues in Pensions is rather basic

jem16

With pension contributions you get tax relief on the way in but are taxed when you receive your pension so to a certain extent it negates itself.

However there are ways in which you do win.

1. You get a 25% tax-free lump sum when you commence your pension.
2. You may be a higher rate taxpayer in employement but only pay basic rate tax when you get your pension. So you have had 40% tax relief but will only pay 20% tax.
3. Everyone has a personal allowance where they don't pay tax - for over 65s this is approx £9.5k so you wouldn't pay any tax if your income was less than this. However if you do more than £22,900 of taxable income you start losing this extra allowance until you are back at the basic personal allowance.

Whether it's correct for you to pay extra contributions will depend on your circumstances. Also are you married and does your spouse have a pension?

tali

Thanks.
My personal allowance would be less than 9.5k
Yes i am married and, no wife does not have private/works pension/

jem16

tali wrote: »

Yes i am married and, no wife does not have private/works pension/

The perhaps you should consider putting money into a pension for your wife so that she is able to get the benefit of her tax-free allowance rather than you paying extra into your pension and paying more tax.