Diverting £50k of salary into pension fund to claim welfare benefits

gadgetmind

shadydaz wrote: »

On a seperate note, I do not agree with the benifits system in this country, money easy for people who do not want to earn it.

Agreed.

One other thing that you are probably aware of CSL1083, if you are able to "sacrifice" so much of your salary, then any death in service allowance paybale to your family will only be based on your notional income.

Most (all?) companies use a pre-pension figure for such benefits. My employer certainly does as I checked before upping my pension payments.

Any pension contributions will stil be tax liable in some way upon your death.

Please explain how you think uncrystalised pension pots are taxed upon death.

gadgetmind

jamesd wrote: »

You might consider schemes like alternating years with some years going down to minimum wage and others using pension investing for all of your higher rate income and putting away two years worth of ISA contributions from the remaining basic rate income.

HMRC do say that reducing your sal sac percentage should only be done due to "life changing" events. I change it every year to make the best of changes in my income and rules like carry forward - surely the ever-changing pension and taxation rules are potentially life-changing if you don't react to them?

Flight2quality

shadydaz wrote: »

Strange how this is being asked the same day as the government launches its "crackdown" on benifit fraud...:rotfl:

Its not fraud they need a crackdown on, its giving up to thousands every week to housing benefit landlords though each low income family. It really is still thousands every week for some families with several kids.

This is proping up prices in London.

gadgetmind

Flight2quality wrote: »

Its not fraud they need a crackdown on, its giving up to thousands every week to housing benefit landlords though each low income family.

I haven't been paying it a huge amount of attention, but I understand that benefits in general, and housing benefits in particular, and being capped to prevent excesses such as you just described and the OP is planning.

ISTR max benefits per family pegged at median working income, which initially strikes me as still being very generous. Of course, those whose benefits give them an income they'd need to earn £65kpa to achieve via honest work would probably feel differently.

Enterprise_1701C

In your place I would simply be happy I was earning that amount and not struggling to turn a business around with a husband that is currently limited in what he can do as he is awaiting a major ankle operation in February when he will be laid up for about 6 weeks.

Just saying count your blessings, things could be worse, you could genuinely have to cope on 12k.

And I know things could be far worse for us too.

shadydaz

OK. Point accepted about the DIS benifit based on Notional salary, maybe I miscontrued the info given to me by my employer regarding this.

Zelazny

I think that the only thing you need to watch out for is the annual allowance, as it applies to employer and employee contributions.

Otherwise it sounds like a great idea - I'd be tempted myself if I were on that much money.

(and as a disclaimer, speaking as someone with an income of considerably less than £3k per month I don't think it's what the benefits system was meant for - we can clearly see that they need to be massively reorganised - but if the rules allow for it, why not? At least the OP has been transparent about his objectives, and has shown a big gaping flaw in the system)

gadgetmind

Jane_Blackford wrote: »

Just saying count your blessings, things could be worse, you could genuinely have to cope on 12k.

That's exactly what the OP is planning to do, albeit with a generous pension scheme running alongside.

rich11

I have got to say this is the most fascinating thread I have ever read on MSE.Will be very interesting to see how this pans out

gadgetmind

rich11 wrote: »

I have got to say this is the most fascinating thread I have ever read on MSE.Will be very interesting to see how this pans out

Agreed 100%.

What we're seeing is the fundamental problem with progressive taxation and benefits, where some bask in the state's largess while others only feel its bitter lash as they toil long hours, forever dreaming of sugar candy mountain.

Sorry, dunno what came over me there!

Anyway, if the state allows one to both bask and get the sugar, so be it.