Urgent Pension Advice please

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
8 replies 904 views
dbrookfdbrookf Forumite
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I must admit I find anything to do with pensions a little difficult! SO, with that in mind, would appreciate someone who is more in the know than me to give some advice on this please:

I am a contractor on a 6-month contract. May be extended, but may not. I want to start putting some funds into a pension (have a previous employer one also).

1 I have a SIPP with H-L. I don't contribute at the moment.

2 My 'agency' have asked me if I want to join their scheme, which benefits from salary sacrifice.

Should I start contributing to H-L SIPP or should I join what could be a potentially short term pension arrangement with my 'agency'?

Replies

  • dbrookfdbrookf Forumite
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    any help out there please?!
  • McKneffMcKneff Forumite
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    We have a few pension experts on here, so just wait a while, let them have their tea and Im sure they will be with you sometime tonight.

    Annie
    make the most of it, we are only here for the weekend.
    and we will never, ever return.
  • jem16jem16 Forumite
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    dbrookf wrote: »
    2 My 'agency' have asked me if I want to join their scheme, which benefits from salary sacrifice.

    Are there any employer contributions?
  • dbrookfdbrookf Forumite
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    jem16 wrote: »
    Are there any employer contributions?

    No (unfortunately!)
  • jem16jem16 Forumite
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    How much will the previous employer pension pay out?

    Are you a basic rate taxpayer or higher rate taxpayer?
  • edited 28 February 2011 at 8:48PM
    dbrookfdbrookf Forumite
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    edited 28 February 2011 at 8:48PM
    jem16 wrote: »
    How much will the previous employer pension pay out?

    Are you a basic rate taxpayer or higher rate taxpayer?

    Previous one currently about £80k pot
    Am higher rate for the duration of this contract.
    I am 55
  • kidmugsykidmugsy Forumite
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    What is the benefit of salary sacrifice for a contract worker? Do you save just your own National Insurance Contribution? (On the higher rate income tax portion of your income, that would be what? 1% this tax year, 2% next?) Or is there an employer's contribution too?
    A question: is it valid to view yourself as a payer of higher rate tax if you're on a six month contract? What if you then go for half a tax year without another contract?
    Free the dunston one next time too.
  • jamesdjamesd Forumite
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    With no employer contribution your benefit from salary sacrifice comes by:

    1. Getting the tax relief immediately instead of having to claim it from HMRC later.
    2. The small amount of saved employee NI, just 1% in 2010-11 and 2% from 2011-12.

    Your employer would save the 12.8% employer NI, 13.8% for 2011-12. It's fairly common for employers to share some of this saving but not all do it.

    You should check the costs of transferring from the work pension to your personal pension. The work one may have a charge that is higher than the possible gain.

    You should ask what happens if your contract ends and you leave. You may be able to transfer it to HL.

    You may lose from a reduced range of investments or gain from a lower cost for them.
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