Should I make pension contributions to my private pension?

gadgetmind

webnibbler wrote: »

that is promptly swallowed up by the 1% AMC on the pension plan arrangement they made with SL !

We're on 0.75%, which is higher than I'd like.

In the initial pensions meeting, I was assured we could do partial transfers out, and I'm about to test this.

webnibbler

gadgetmind wrote: »

We're on 0.75%, which is higher than I'd like.

Yes, a medium sized buisness should be able to broker a deal around 0.5% for a group scheme, I think.

Would be interested to hear how the partial transfer goes, I'm planning to attempt one next year, depending on charges.

gadgetmind

webnibbler wrote: »

Yes, a medium sized buisness should be able to broker a deal around 0.5% for a group scheme, I think.

I could start a pension on the very same platform via Cavendish Online and get the same funds for 0.55%. You comments have spurred me into another bout of kicking on this subject. Thanks.

Would be interested to hear how the partial transfer goes, I'm planning to attempt one next year, depending on charges.

OK, will do. I was told "no charge" but Bestinvest will also cover certain charges anyway.

atush

jem16 wrote: »

Sorry atush but no matter what the fall/rise, the only difference between the ISA and the pension will be the tax relief that the pension gains.

This of course can be an advantage if the tax paid in retirement is less than the tax relief gained but otherwise will be exactly the same in the end. That is after the tax-free lump sum taken.

That's why it's beneficial to have both pension and ISA as part of your planning as gadgetmind says.

8000 in an isa, 10,00o in a pension- but it costs only 8,000 as 200 is tax relief. If the market fell, 20% the next week, the pension would stillb e worth what the person put in- 8000. The ISa would be worth 20% less.

I agree everyone needs both.

atush

fairleads wrote: »

This is what Alex p said

I think I won't contribute personally and just let the company contribute as I am concerned about this money going to waste since the growth of that money is out of my control. For me it makes sense to build up ISA as well as invest in property. Then a state pension + a limited private pension + interest + rental income should be more than sufficient during retirement.

Perhaps you should reread my comment again which was made in reply to the above and then ask yourself where did the op say they're putting all their eggs in the Isa? Neither the op nor I did.
All i did was agree with Alex p that the stategy above was a good one. Its called diversification.

So, Alex is putting ALL his Eggs in the ISA basket. He is only putting his employers eggs in the pension basket.

He may plan to use the ISA money to buy a house later on, but this will not help him fund retirement. I hardly forsee a great future ahead with just the emplyers contributions.

fairleads

atush wrote: »

So, Alex is putting ALL his Eggs in the ISA basket. He is only putting his employers eggs in the pension basket.

He may plan to use the ISA money to buy a house later on, but this will not help him fund retirement. I hardly forsee a great future ahead with just the emplyers contributions.

Dear oh dear - the emphasis negates your argument somewhat. Failed Gcse English perhaps?
As to the future - Alex, stick to your plan, it's a good one.

fairleads

atush wrote: »

I hardly forsee a great future ahead with just the emplyers contributions.

Forgot to add re the above. Your ignorance is exceeded only by your arrogance.

jem16

atush wrote: »

If the market fell, 20% the next week, the pension would stillb e worth what the person put in- 8000. The ISa would be worth 20% less.

As soon as you take the pension, the pension falls another 20% as it's taxable income and the ISA does not so both are now equal again.

I am of course ignoring the tax-free lump sum as that is the biggest advantage as already said. Also assumes the OP has already used up his personal allowance.

alex_p

dunstonh wrote: »

It is estimated that if you intend to rely on property for retirement, you will need around 6-8 properties.

Yes I've heard similar estimates before but why do you need so many?

Suppose you own a property which is mortgage free and you are getting £300 per week, so that's £1200 a month. If that's your only income then tax is going to be quite low. Add that to your state pension and a private pension and it's a reasonable income? No? If you had 2 such properties then it would be even better!

Am I missing something why do you need 6-8 properties?

dunstonh

Yes I've heard similar estimates before but why do you need so many?

1 - you need to repay the mortgages at some point. So, that will require you to sell some properties to raise the money and hopefully there should be some equity to allow only a few to be sold to cover it. If you only have one property, then it has to be sold to repay the mortgage. If you have several, you will need to sell enough to cover the mortgages in total.

2 - you will have to pay CGT on the property sales. So, that may take another sale or two to clear that.

3 - With what you have left with no mortgages on, you will need to pay tax on the rental income. If we put your rental income at £500pm (in todays terms) then you need to put aside some for costs and you will have to pay income tax on the rest. You also need to be prepared for future work on the properties. If you are going to live around 25-30 years, the properties will need serious work on them periodically.

4 - so, if we say your final figure in your pocket is £300, then how does that cover your actual need. If you want £21,000 a year, you will need around 5 properties left.

Suppose you own a property which is mortgage free and you are getting £300 per week, so that's £1200 a month. If that's your only income then tax is going to be quite low.

How do you get it mortgage free? The assumption is that to get to that point, you would need to have capital to clear the mortgage. If you go down the property route, then your capital is going to be tied up in property.

If you are going to do a bit of everything, then that is better.