Dilemma

MarcoM

Hi

I notice that some people suggest to put extra money that is not needed into additional pension constibutions (after maxing out ISAs).

I am part of a public pension scheme so the advantages of paying more into it would be good however I do worry that in the decades to come the retirement age will slip further and further.

Would it be worth investing the extra available cash into a separate SIPP? I understand that at the moment these can be cashed at 55.

Thanks

mania112

and that age 55 is not guaranteed either.

You final salary scheme probably has a cap as to how much you can contribute? Thereafter there may be an AVC scheme. This is useful as at retirement you can take tax free cash from this plan first, meaning the guaranteed pension from the final salary can provide a higher pension (than if the AVC didn't exist).

AVC - additional voluntary contributions.

jem16

The answer really depends on your tax status.

Are you a higher rate taxpayer or not?

jem16

mania112 wrote: »

Thereafter there may be an AVC scheme. This is useful as at retirement you can take tax free cash from this plan first, meaning the guaranteed pension from the final salary can provide a higher pension (than if the AVC didn't exist).

AVC - additional voluntary contributions.

The OP appears to be a member of the NHS scheme which doesn't give this option for AVCs.

MarcoM

Lower rate taxpayer.

Take your point about 55 not being guaranteed but if that goes up to 60 I do not think other pensions schemes ret ages will stay put either....

Tancred

MarcoM wrote: »

Hi

I notice that some people suggest to put extra money that is not needed into additional pension constibutions (after maxing out ISAs).

I am part of a public pension scheme so the advantages of paying more into it would be good however I do worry that in the decades to come the retirement age will slip further and further.

Would it be worth investing the extra available cash into a separate SIPP? I understand that at the moment these can be cashed at 55.

Thanks

You can only plan on information available at present.

If you are under 30 it would be safe to assume a state retirement age of 70.

jem16

MarcoM wrote: »

Lower rate taxpayer.

So pension-wise you are not going to gain much by extra contributions into a SIPP/PP/AVC.

Have you considered Additional Pension through the NHS - you seemed to be talking about that earlier?

Your other option is not using any tax wrapper like the ISA/Pension but just investing unwrapped.

What are you hoping for? Is it to retire earlier than the proposed new retiral dates for the NHS?

MarcoM

Early retiremenr is a must.
Property already paid off and have an investment in a vanguard 80 equity plus cash reserve.
I am toying between a BTL and additional pension for the spare money but as mentioned before I do not want to put money aside with the risk of retirement being increased to 80....

jem16

MarcoM wrote: »

I do not want to put money aside with the risk of retirement being increased to 80....

You will be able to take early retirement with an actuarial reduction.

grey_gym_sock

or use unwrapped stock market investments. this often involves paying no extra tax compared to a S&S ISA.

for a basic rate payer, there is no extra tax on dividends from unwrapped investments. (there is on income from REITs, corporate bonds, and gilts - so it's better to put them in an ISA than dividend-paying shares.)

CGT doesn't come into play until you exceed your £10,900 annual allowance, which isn't likely until you have a fair bit of unwrapped investments.