putting aside £750 pm towards pension egg

jem16

dutchism1958 wrote: »

My wife died recently.

I'm very sorry to hear that - my apologies and condolences. (I should have realised from your last post)

You mentioned you would be looking at getting that higher rate tax relief from pension contributions now rather than later.
Sorry...showing my lack of understanding Jem16 but how do I go about initiating that?

By paying into a pension now rather than later.

Am I right in thinking you would look at the possibility of a personal pension plan or are you suggesting AVC's via my company pension.(which are not viable at present)to obtain the higher rate tax relief?

AVCs are really obsolete now unless the company also pays into them (not usual ) or the tie-in with the final salary pension allows you to take your whole 25% lump sum from the AVC pot (again not many do but there are some).

Personal pension would give you better options normally than AVCs.

Is it possible that you can contribute to both ISA and pension? That is what I do - pension contributions to soak up higher rate tax as i will not pay higher rate tax in retirement plus make full use of ISA allowance.

Batchy

Hi just to check, although its highly unlikely to happen.

it was quoted before based on salary of 50k,

roughly 6k 40% tax benefit
the 44k of 20% tax benefit

just wondering, would you really get 44k of tax of 20% added back to contributions or would it exclude the tax free you already receive. So effectively you can pay it in already at 100% as its already tax free. So for OP, with 15k of personal allowance, he would only be able to get tax back @20% on the value between 44k and 15k ie, 29k.

So if he won the lottery, and wanted to max out pension contributions, then it would kick in, otherwise its pretty much not worth discussing? as he will need money to live on in the mean time.

Batchy

JoeCrystal wrote: »

One rule of thumb I often hear is the age divided by two to give percent of salary to be saved into Pension. (26%)

I wonder if you have thought of seeing several IFAs to ask about the choices?

I don't see the sense in this, if I was working towards an inflated 30k net on my retirement for a couple, then you would need to think about what fund you would need at the end (retirement date).

Also, just wondering, but say you want a 30k income on retrement in 33 years. say that would cost 600k (at todays values) compounding back to now taking account of above inflation rises of say 5% (average annualised Equity returns over the last 110 years above inflation)

So basically you need a fund today of 120k (what I dont understand is why can't I get a mortgage for that amount, pay it off with tax free money ie only 80% payments (capped) so say 460.00 per month Net (rough calculation), for the next 25 years fixed at 4% for now or even for 25 years (or whatever the fix is). Then with reasonable returns and less risk investments being well diversified, for the next 30 years. I have an almost guaranteed pension, worth living till retirement for? plus I dont have to pay into it for the last 5 years nearing retirement as the hard work is done, after say 10-15 years, your Pension mortgage is inflated AWAY, rather than paid into a pension, is the penison thing another giant pyramid scheme so basically, it only works, while it continues at its current levels?

The government should make it easier to structure your retirement, rather than facing risky investments, and inflationary risks. easier said than done obviously!!!! Does the economy LIVE off pension investments, and money going back into companies, for financing etc? So would this just not work if everyone could do it?

dutchism1958

jem16 wrote: »

I'm very sorry to hear that - my apologies and condolences. (I should have realised from your last post)



By paying into a pension now rather than later.



AVCs are really obsolete now unless the company also pays into them (not usual ) or the tie-in with the final salary pension allows you to take your whole 25% lump sum from the AVC pot (again not many do but there are some).

Personal pension would give you better options normally than AVCs.

Is it possible that you can contribute to both ISA and pension? That is what I do - pension contributions to soak up higher rate tax as i will not pay higher rate tax in retirement plus make full use of ISA allowance.

Afternoon Jem16,

No problems and no offence taken regarding my wife-I wasn't clear.
I agree with you regarding AVC's so the above option for a split between ISA + Pension which you do makes sense.
If I maximise the ISA(assuming you would go for S&S rather than cash ISA) I wont have anything left towards a Pension.
At £750 pm I have £9K to play with so I guess £5100 into S&S ISA per annum & the remainder into a pension.
Is that a good split?
Thanks.Gary.

jem16

Batchy wrote: »

Hi just to check, although its highly unlikely to happen.

it was quoted before based on salary of 50k,

roughly 6k 40% tax benefit
the 44k of 20% tax benefit

just wondering, would you really get 44k of tax of 20% added back to contributions

Yes you would.

or would it exclude the tax free you already receive.

Not that I'm aware of.

So for OP, with 15k of personal allowance, he would only be able to get tax back @20% on the value between 44k and 15k ie, 29k.

The OP doesn't have £15k of personal allowance - that was another poster whose tax code had been adjusted.

So if he won the lottery, and wanted to max out pension contributions, then it would kick in, otherwise its pretty much not worth discussing? as he will need money to live on in the mean time.

I suppose the idea was to save the money in an ISA and then contribute to the pension in a lump sum.

jem16

dutchism1958 wrote: »

If I maximise the ISA(assuming you would go for S&S rather than cash ISA)

Yes I meant S&S ISA as opposed to cash ISA - cash ISAs are barely keeping ahead of inflation (some aren't)

At £750 pm I have £9K to play with so I guess £5100 into S&S ISA per annum & the remainder into a pension.

Personally I would go with £6k into the pension to take full advantage of the 40% tax relief and the rest into the ISA.

However in the end it's your choice.

dutchism1958

Hi Jem16,

Thanks for your reply.
I know the decision and responsibility is mine but are there are Pension companies to avoid or ones you would consider as "better bets".
What should i go for with regards to investing my 6K.
Just a basic pension or a wrapper?
Thanks again.Gary.

jem16

dutchism1958 wrote: »

I know the decision and responsibility is mine but are there are Pension companies to avoid or ones you would consider as "better bets".

The decision should be down to where you want to invest, what funds will allow you to do that and which pension provider gives access to those funds.

Choosing a pension is not as easy as choosing the best rate savings account. There are so many variables to consider such as amount of contribution, frequency of payments, length of investment etc, etc.

What should i go for with regards to investing my 6K.
Just a basic pension or a wrapper?

The pension is a wrapper - a tax wrapper.

Your choices are stakeholder, personal pension or SIPP.

The SIPP would normally be for the experienced investor who wants access to direct investments such as shares, property etc.

A stakeholder gives access to fewer funds and usually internal from the insurance company.

A personal pension should give access to many more funds, both internal and the better quality external funds.

dutchism1958

jem16 wrote: »

The decision should be down to where you want to invest, what funds will allow you to do that and which pension provider gives access to those funds.

Choosing a pension is not as easy as choosing the best rate savings account. There are so many variables to consider such as amount of contribution, frequency of payments, length of investment etc, etc.



The pension is a wrapper - a tax wrapper.

Your choices are stakeholder, personal pension or SIPP.

The SIPP would normally be for the experienced investor who wants access to direct investments such as shares, property etc.

A stakeholder gives access to fewer funds and usually internal from the insurance company.

A personal pension should give access to many more funds, both internal and the better quality external funds.

A final thanks from me Jem16.
I now need to sit down and read up on a personal pension for myself.I have really appreciated your time and patience in responding to my many and amateurish questions.
If i should win the lottery I'll cut you in!!
Thanks.Gary

jem16

dutchism1958 wrote: »

I have really appreciated your time and patience in responding to my many and amateurish questions.

No problem at all - I asked the same questions a few years back. I still leave the decisions to my adviser but at least I have a better understanding of it all now. I still ask stupid questions even now though!

If i should win the lottery I'll cut you in!!

Now that would be nice.