Delaying pension contributions

bowman84

I'm a higher rate tax paper but can't join the company pension scheme for another 2 years.

Can I save my income now, invest it in my brokerage account, and then when I do become eligible, then put this in my pension fund and still claim full tax relief (subject to contribution < income/215k..)?

Or shouuld I just open some cheap stakeholder with no transfer fee to start claiming tax relief and then transfer out in 2 years time?

Would really appreciate any help!

david78

Yes, you can invest in equities outside a pension wrapper now, and move the money into a pension later (subject to annual/lifetime limits). This is an especially good tactic for basic rate rate tax payers who expect to become higher rate payers in a few years time.

Its best to ensure that all of the gross pension contributions you make (in any tax year) come out of the your income taxed at 40%.

bowman84

Perfect, thanks for the quick response!

CLAPTON

a lot depends upon the T&Cs of your company pension.

does it specify a maximum annual amount (say 6% of salary)?
does the company also contribute in proportion to your contribution ( is that unlimited)?
is it a final salary type scheme?

these are critical issues before deciding to invest in the scheme