Work based pension- how much can they contribute?

textbook

I work for a dodgy company- always trying to worm out of any kind of payments. For the government's- work based pension scheme this year (2016), what's the maximum I can pay in and have matched? I know it goes up every year. Last year it was 3% that my company had to match.


Also, is this pension scheme any good? If not how can I prepare for my future, pensionwise?


I have only paid (as far as I know) 5 and half years NI payments and I am 42. I may have more, but am not sure as I left the country for 11 years at the age of 25. And before then I am not sure how many NI payments were paid in.


Is the best pension to get property and rent it out?

jamesd

There are several possible limits:

1. Your earned income this tax year, for the part from you in after tax money. Your employer's payment doesn't count against this limit if they pay it before tax and NI. Your amount is grossed up by the tax relief added unless it's done by salary sacrifice, when it instead counts as an employer contribution instead of one from you.

2. £40,000 plus any unused annual pension contribution from the previous three years if you were in any pension scheme during those years. So potentially £160,000 and more depending on ust when contributions were made last year because there was a time range where a double allowance or the year applied. Your employer's payments and the gross value of any payments you make are added together for this.

3. what your employer is willing to pay. This is the one that is most likely to matter in the real world. Your employer will be required to pay in only the amount within a certain band of income. If they are just going to do the minimum the law requires say so and someone can point you to the requirements.

greenglide

Last year, and this year, the company only has to pay 1% and many only do this bare minimum, especially small companies so you employer doesn't seem as bad as it could be.

The best form of pension is accumulated wealth of pretty much any kind, the differences are in the tax wrappers. BTL has numerous down sides - stamp duty surcharge, loss of tax relief on mortgages, risk of voids etc. Employers pension schemes have employers contributions at no cost to you plus tax relief on payments that you make.

Also there are Stocks and Shares ISAs (cash has a very limited involvement with pensions) .

It looks like the new Lifetime ISA which could be appropriate is only for younger people.

jamesd

We can't say whether this pension scheme is any good because you haven't said which pension scheme it is. There are hundreds that it could be. The auto-enrolment part, matching and tax relief combination is good. Many employers will use NEST, The People's Pension or Now: Pensions but they don't have to use one of those. NEST is one that is required by law to accept all employers, even a person who's only employee is a part time babysitter.

To find out your state pension situation, use the State Pension Statement system. You'll probably have your current situation and projection in fifteen minutes from start to finish. You can also check your history of NI payments there, telling you which years do and don't count and why. It will also tell you whether there are any years that you can buy.

Under the flat rate pension system a person only paying NI in that system needs 35 years to get the full flat rate pension. It appears that you have at least 5 years (maybe 8 with juvenile credits) and at least another 26 years to your state pension age. So you probably have the potential to get to 34 years total without buying any past years. You can buy past years up to six years back so if you returned to the country in the last six years you can probably buy some and should buy at least one. If no juvenile credits, better to buy four. Maybe more if you want a bit of safety margin and don't mind risking getting nothing for the spending.

It would be good to say which countries you worked in. This is because some countries have social security agreements with the UK that can help to count towards your UK state pension. I'm not very familiar with these arrangements but if you give the countries someone who is will probably step in or there's a help number you can call.

textbook

jamesd wrote: »

We can't say whether this pension scheme is any good because you haven't said which pension scheme it is. There are hundreds that it could be. The auto-enrolment part, matching and tax relief combination is good. Many employers will use NEST, The People's Pension or Now: Pensions but they don't have to use one of those. NEST is one that is required by law to accept all employers, even a person who's only employee is a part time babysitter.

To find out your state pension situation, use the State Pension Statement system. You'll probably have your current situation and projection in fifteen minutes from start to finish. You can also check your history of NI payments there, telling you which years do and don't count and why. It will also tell you whether there are any years that you can buy.

Under the flat rate pension system a person only paying NI in that system needs 35 years to get the full flat rate pension. It appears that you have at least 5 years (maybe 8 with juvenile credits) and at least another 26 years to your state pension age. So you probably have the potential to get to 34 years total without buying any past years. You can buy past years up to six years back so if you returned to the country in the last six years you can probably buy some and should buy at least one. If no juvenile credits, better to buy four. Maybe more if you want a bit of safety margin and don't mind risking getting nothing for the spending.

It would be good to say which countries you worked in. This is because some countries have social security agreements with the UK that can help to count towards your UK state pension. I'm not very familiar with these arrangements but if you give the countries someone who is will probably step in or there's a help number you can call.

The work based one. Using Aviva. The company matches my 3% contribution.