Additional Work Based Contributions

6022tivo

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??

quotememiserable

Yes it is. I do it big style.

dunstonh

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.

AllyMac

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

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

So, you are retiring at 55?

6022tivo

God no, but if I lost my job post 55, I wouldn't be too bothered about getting another.

PeacefulWaters

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

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

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

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?