Annual Allowance Exceeded - What to do now?

Josiejo1970

From 17/18 my unused annual allowance will have gone so any pension contributions I make will be subject to 45% tax.

Am I being naive in thinking it's still worth contributing to my employers workplace pension. I pay 3% and they top up to 20%. Then I pay an addition 3% which they match. So, in total I get 20% contributions for my 6% contributions.

Based on my current salary and contributions I could have roughly £30000 a year going into my pension. £7k paid by me. Even with a new tax liability for a minimum £10k allowance for pensions, I would pay £9k tax (but the pension provider would take this from my retirement fund). So in real terms, for £16k cost to me I'm still getting £30k into my pot so I'm gaining £14k.

What other ways of saving for retirement other than investments (I'm risk averse) or property (hassle) could give me those sorts of returns?

Feel like I'm missing something as all of my colleagues are coming out of the scheme but, whilst it's rubbish I pay even more tax, my employers contributions outweigh the costs.

Thanks.

anselld

At that sort of income level you will only get more help from the tax-man if you are willing to take higher risks - EIS, SEIS, VCT schemes, etc.

tigerspill

Is this a DC or DB pension? The annual allowance calculations are very different for each.

michaels

Don't forget your pension is also taxed on the way out - will you be a higher rate tax payer after retirement?