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Additional Work Based Contributions

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I am in my 40's and am thinking of putting a lot more of my salary into my work place pension.

I have surplus cash around at the moment, and can't see an additional need for money for the foreseeable future. House paid etc, ISA sorted.

I have found out that through salary sacrifice, I will be able to get 20% extra effectively, plus NI savings. Also my company pass their NI savings to me as well (Not many do this apparently).

I can chuck it into my pension pot, and maybe draw on it from the age of 55 keeping my income under the tax threshold (Currently £11k) ?


Appears to be a fool proof way of attracting a 20%+ bonus on my money?? Is it this simple??
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Comments

  • Yes it is. I do it big style.
  • dunstonh
    dunstonh Posts: 119,591 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Appears to be a fool proof way of attracting a 20%+ bonus on my money?? Is it this simple??

    Yes.

    However, drawing it at 55 is not normal unless you happen to be stopping work at that point. The average age is 63. Remember that a pension is tax free until you draw it and also outside of the estate for IHT. There is no point taking money out of pension unless you need it.
    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.
  • AllyMac
    AllyMac Posts: 102 Forumite
    Check with your company that you can definitely draw it at 55.
    I wanted to build an additional pot to see me through from 60 to 65 when my company pension starts. I can pay in AVCs, but they only allow me to take them out when I start my main pension.
    Instead I pay into a private pension - I get the tax relief, but not the NI relief. But I can access it earlier!
  • 6022tivo
    6022tivo Posts: 811 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Yes, I can get it back at 55.

    Appears this Osborn guy knew what he was talking about. This appears to be an excellent plan for my retirement. :)
  • dunstonh
    dunstonh Posts: 119,591 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    So, you are retiring at 55?
    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.
  • 6022tivo
    6022tivo Posts: 811 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    God no, but if I lost my job post 55, I wouldn't be too bothered about getting another.
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    AllyMac wrote: »
    Check with your company that you can definitely draw it at 55.
    I wanted to build an additional pot to see me through from 60 to 65 when my company pension starts. I can pay in AVCs, but they only allow me to take them out when I start my main pension.
    Instead I pay into a private pension - I get the tax relief, but not the NI relief. But I can access it earlier!

    You could pay into the company AVC and transfer it to a private pension before you retire and access it independently of the company scheme.

    That way you get the benefits of salary sacrifice and pension liberation.
  • AllyMac
    AllyMac Posts: 102 Forumite
    Thanks PeacefulWaters but I was told that was a no - no transfers allowed.
    I also liked the idea of not having both by pension eggs in one basket though.
  • 6022tivo
    6022tivo Posts: 811 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Sorry, I wasn't very clear.

    It is a pension setup by the company, but it is a Private Pension with friends life.
    I would be paying directly via salary sacrifice into that.

    That any clearer?
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    AllyMac wrote: »
    Thanks PeacefulWaters but I was told that was a no - no transfers allowed.
    I also liked the idea of not having both by pension eggs in one basket though.

    Did you ask recently?
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