Pensions / Saving / Investments

atush

Notfarfromtheborder wrote: »

But am I not just delaying paying tax on this at a later date, also some more liquid assets would be beneficial if legislation changes and I need to access cash before pensions could be released?

I am not sure you read fully some of the above posts.

The point is, you aren't deferring tax but avoiding it completely if you are drawing down a DC pension int he years were you are not earning nor receiving a pension. Ie taking a DC pension using your 10.K or higher PA over a number of years before a DB pension pays in full (and you never said she was special classes) and your State pensions.

A higher rate taxpayer gets their CB back thru pension contribs, not Isas.

I wasn't sure any 45 yr olds would still be covered by special classes under the new pensions. At least for years accrued from now?

Notfarfromtheborder

atush wrote: »

I am not sure you read fully some of the above posts.

The point is, you aren't deferring tax but avoiding it completely if you are drawing down a DC pension int he years were you are not earning nor receiving a pension. Ie taking a DC pension using your 10.K or higher PA over a number of years before a DB pension pays in full (and you never said she was special classes) and your State pensions.

A higher rate taxpayer gets their CB back thru pension contribs, not Isas.

I wasn't sure any 45 yr olds would still be covered by special classes under the new pensions. At least for years accrued from now?

Thanks, think I'm getting there now.

So, sacrifice my salary to below 42K, build up some emergency cash, just opened 2 x First direct savings accts paying 6% (will probably be 3% on the total balance as max £300 per month into each acct and interest is daily. £7,200 after year 1 and then review.

You may be right re new 2015 NHS pension changes, we'll have to see on that one, but I believe the rights she has accrued will be protected, maybe the next ten years she will be in the new scheme will be different.

dunstonh

Pension contributions lower your income. The lower the income you have, the more tax credits you get. It is theoretically possible to get the equivalent of 72% tax relief (if you treated the extra tax credits as tax relief).

mania112

atush wrote: »

Please, get over your new financial advisor self

If you are going to castigate me, who says it only occasionally, it is every other work out of JamesD's mouth but you wont take him on will you?

Are you telling me, then, to be a bad adviser?

If you're approaching retirement you want zero debt, that's my opinion. I believe you would have a more comfortable retirement if you have as little to pay out as possible.

You told the OP they were making a 'classic mistake' and they'd be 'better off investing' - you can't say that.

This is God's day, so please lower the tone.

P.S - What's this about JamesD? Are you saying he says the same thing as you?

atush

I am telling you you have no right to say that to me. I can give whatever is my opinion and that of others here. W/o you saying I can't. Paying off debt at 1-3% when you can do better with HRTax relief is just silly. Paying off debt at 10-30% is VERY good advice.

I am not a licensed advisor but I am only saying what other do here. And that is leave paying off mtg until you have pensions and other savings while rates are low. Esp when you dont have the gumption to say it to others who say the same. I did NOT say not to pay off the mtg early if you have a pension and other things in hand.

As far as bringing religion into it, just dont go there. It isnt the lord's day to all here so dont you muddy the water.

mania112

atush wrote: »

dont you muddy the water.

haha! perfect quote.

You're good you.

p.s. - i'm an Atheist, was just trying to lighten the mood. I failed at humour too i guess.

atush

Yep epic fail at humor.

the Classic mistake is........

To get too hung up on mtg debt when it is a cheap debt as per now and many years in recent past.

Too many with a one track mind concentrate on paying off the mtg early, when mtg debt is cheap, at the expense of paying into a pension with 20-40% relief and then the income and growth being tax free.

Thrugelmir

atush wrote: »

Yep epic fail at humor.

the Classic mistake is........

To get too hung up on mtg debt when it is a cheap debt as per now and many years in recent past.

Too many with a one track mind concentrate on paying off the mtg early, when mtg debt is cheap, at the expense of paying into a pension with 20-40% relief and then the income and growth being tax free.

Timing is important. Questionable if now is the time for S&S. There's been an era of cheap debt. That's on it's final lap.

claire111

OP -

You should research the option to purchase Additional NHS Pension here

http://www.nhspa.gov.uk/PDWeb/PensionCalculators/AdditionalPension/index.htm

and then obviously compare with other investment choices. I did the same excercise and for me, at this moment in time, it was very favourable.

This option at these rates may be removed April 2015 so a lump sum payment would possibly be best.

Bear in mind that tax relief can be claimed on the payment too although it is a bit of a headache getting HMRC admin staff to understand that bit ...

jamesd

mania112 wrote: »

Are you telling me, then, to be a bad adviser?

I don't think that you're a bad adviser and I hope that atush doesn't either. If nothing else, I know that most of the population has a pretty low risk tolerance and think that this place selects in favour of those who are likely to have higher than usual risk tolerance, because those people are more likely to take an interest.

I'll cover risk tolerance if when writing my reply I decide I'll mention the possibility or taking out a mortgage. Edit: after doing it I think it's premature to go there. Target setting and guaranteed income already accumulated first, then on to how to get to the target.

mania112 wrote: »

You told the OP they were making a 'classic mistake' and they'd be 'better off investing' - you can't say that.

Atush can say that on the basis that in general mortgage interest costs are below investment returns so ignoring risk tolerance overpaying a mortgage is likely to make you worse of than investing instead. But of course risk tolerance has to be considered.