Started my pension

Lirin

Just started mine tonight. Was shown a few deals, and chose one that takes about 8% of my monthly income...

Just interested in roughly how much everyone is paying monthly/ per annum into a pension and for what return?

sandsy

As I have a very low interest on my mortgage at the moment (base rate tracker plus 0.48 % ) I'm putting the money I used to put into the mortgage into pension. Currently I'm paying in 37% of gross salary and my employer is paying in 13% (so 50% altogether). I've brought myself down from being a higher rate tax payer to a lower rate tax payer, and will be just under the higher rate limit.

Lirin

Getting a fast education on here. Pension was something I'd meant to start a few years ago.

Ginger_Red

Similar thing to sansdy for me, but I finished paying off my mortgage a couple of years ago (I'm 42 now) and just switched what I was paying into that into my pension fund.

It works out at about 20% of my gross salary, but will have to cover my wife's retirement as well....but we both have public sector FS schemes for what they're worth.

Simple !

As for return, who knows ? We just save what is comfortable and what I project will give us about 75% of our current income when we retire.

Neither of us will stay in the private sector beyond the life of this government (their choice as much as ours) so we'll reassess our level of contributions as our circumstances change.

Pee

I pay 10% of my salary into a pension and have since I bought my first house, when I was 24. The mortgage was, and still is, interest only and has increased once since, when I sold that house and bought my second, although I have also made some overpayments. My intention is to repay the mortgage without looking to the pension, and this was always my intention but the pension was a back up plan as the tax free lump sum available was supposed to cover the mortgage.

There have been some rule changes in those 10 years and my view is for the moment to keep paying in and review it properly in the future i.e. if my income goes up.

It's nice the government make their contribution, too!

brianrhill

sandsy wrote: »

As I have a very low interest on my mortgage at the moment (base rate tracker plus 0.48 % ) I'm putting the money I used to put into the mortgage into pension. Currently I'm paying in 37% of gross salary and my employer is paying in 13% (so 50% altogether). I've brought myself down from being a higher rate tax payer to a lower rate tax payer, and will be just under the higher rate limit.

Oh dear If you had stayed a high rate tax payer each pension contribution effectively costs you just £60 per £100 invested instead of £80 per £100 for basic rate tax payers.

sandsy

brianrhill wrote: »

Oh dear If you had stayed a high rate tax payer each pension contribution effectively costs you just £60 per £100 invested instead of £80 per £100 for basic rate tax payers.

I think you're wrong. I'm getting pretty much 40% relief on it because I'm virtually right on the limit. If I took all that money as income I'd be taxed at 40% on all of it. If I calculate my net salary with and without the contribution to pension, the difference is is 60% of the pension contribution - which means I'm getting 40% tax relief.

jem16

sandsy wrote: »

I think you're wrong. I'm getting pretty much 40% relief on it because I'm virtually right on the limit. If I took all that money as income I'd be taxed at 40% on all of it. If I calculate my net salary with and without the contribution to pension, the difference is is 60% of the pension contribution - which means I'm getting 40% tax relief.

Your reasoning is correct. I do exactly the same.

brianrhill

The extra 20% you get back as a high rate tax payer for personal pension contributions comes back to you after you have completed your annual self assessment.

The only way to obtain instant 40% tax relief on pension contribuitions is by having your pension payment made from your gross pay, not your net pay.

You either get 20% or 40%.

jem16

brianrhill wrote: »

The only way to obtain instant 40% tax relief on pension contribuitions is by having your pension payment made from your gross pay, not your net pay.

Sandsy said he paid 37% of his gross salary into the pension so not quite sure where you're going with this?

lvader

brianrhill wrote: »

The extra 20% you get back as a high rate tax payer for personal pension contributions comes back to you after you have completed your annual self assessment.

The only way to obtain instant 40% tax relief on pension contribuitions is by having your pension payment made from your gross pay, not your net pay.

You either get 20% or 40%.

Not true, most people get it back through a higher tax allowance. Only people who earn 100K+ or have other income need to fill in tax returns.