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Pension catch-up

Hi,
I will probably approach an IFA but would be grateful if a forum member with financial knowledge could give their thoughts/advice.

I'm in my late 40's, have a family & earn approx. £45,000.
Our house is mortgage free & we have with £50,000 in ISA's & a further £50,000 earning little interest.

I know I should have taken out a pension before but, to build up a reasonable pot, am thinking about taking out a Personal pension & paying in £30,000 a year salary sacrifice for 3 years, or more.
We can live on the remainder of my salary, non isa savings & wife's small income.

Any thoughts on disadvantages or which might be the best pension etc. would be really appreciated.

Thanks.
«1

Comments

  • dunstonh
    dunstonh Posts: 118,604 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Impossible to call which pension you should use because there is no one best option. Many focus on different investment sizes, methods of payment, investment options etc.

    Salary sacrifice would need your employer to agree it. Typically, that means they will offer their own pension scheme (although some smaller ones may allow you to use your own).

    Retirement planning should be viewed jointly. Not all lopsided in one persons name.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Linton
    Linton Posts: 17,941 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    Why a personal pension? Isnt there an option of an employers pension with an employers contribution? If you want true salary sacrifice that would need to be arranged through your employer who might not want the hassle of dealing with a private pension.

    Or are you employed by your own company?
  • Thanks for the quick response Dunstonh & Linton,

    It's a very small firm (4 including owner) with no pension arrangements. I'm sure he would go along with salary sacrifice scheme, so just wanted to take advantage of the tax relief to make up some of the time I've lost in creating a pension pot by living off some of my savings - which are gaining little interest.

    I would still keep Isa's and was thinking of re-mortgaging after the 3 years for a buy to let deposit. That way we would have a various pensions savings. The savings & BTL in wife's name as she pays no tax.
    I'm not sure if a personal pension is the best route yet so happy to take advice, I was more concerned to find out if there was a potential large downside in building up the 'pot' so quickly before approaching my employer then IFA.
    Thanks again
  • xylophone
    xylophone Posts: 45,427 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    There can be other advantages to a very high pension contribution....;)

    https://forums.moneysavingexpert.com/discussion/4753080
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Yes, there are many advantages to a pension in your case incl using the above link.

    For a start you are a HRTaxpayer, so are paying 40% on a tranche of your salary.

    I would open a PP for your OH as well. She can only pay in 2880/3500 after tR each year, but she will have a Personal allowance in later years, and your excess non Isa'd cpaital will be in all likelyhood be in pensions/Isas by then.

    And if you contribute more into ISAs, do use S&S ones. over cash. And if the 50K is all cash, i'd transfer some of that this year to S&S.
  • Thanks Xylophone - that hadn't occurred to me, although I don't think I could go down that route, but very 'canny' of you!

    Thanks Atush - Yes, stocks & share isa's have also been something I know I should have been using instead of ordinary savings accounts. My wife doesn't earn enough to pay tax so that's why I thought it better to pay into just my pension.

    It seems that my original idea makes sense but choosing the right pension provider is the tricky part. I was thinking of a personal pension with Scandia or Scottish Widows as they have been voted top providers by Moneywise.
  • jem16
    jem16 Posts: 19,494 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    kie-ade wrote: »
    My wife doesn't earn enough to pay tax so that's why I thought it better to pay into just my pension.

    She will be able to get tax relief on £3600 or 100% of her earnings (whichever is greater) even though she doesn't pay tax.

    You are best to try and plan jointly so that each of you is using up your whole personal allowance.
  • xylophone
    xylophone Posts: 45,427 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    http://www.hmrc.gov.uk/incometax/relief-pension.htm

    See "What happens if you don't pay tax". http://www.cavendishonline.co.uk/pensions/personal-pensions/ might be something here of interest.
  • xylophone
    xylophone Posts: 45,427 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Another thought, has your employer thought of setting up a pension plan?

    http://www.fsb.org.uk/pension-scheme

    https://www.moneyadviceservice.org.uk/en/articles/salary-sacrifice-schemes
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    yes, the best penions are ones other people pay into on your behalf ;-)

    We call that 'free money' here
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