Quick question

typeractive

Hi all,

I've searched around for this and think i might be phrasing it incorrectly into google :embarasse, if I get a job that earns more money, do I benefit from that when I reach retirement? I.e. will my state pension be higher? (the more you pay in the more you get back?).

Thanks!
:beer:

molerat

Not any more. The new 2016 pension gives you, at current rates, £4.56 pension for each year contributed up to a maximum 35 years and £159.55 per week irrespective of how much (over the minimum) you earn. There is of course transitional arrangements for pre 2016 pension earnings but if you had less than the maximum at April 2016 then the maximum new pension figure is all you can achieve.

enthusiasticsaver

Your state pension won't be but your occupational pension might. You need to check the scheme and benefits. I don't know about you but our retirement financing is based 75% on occupational pensions/savings and only 25% state pension and we retire(d) 8 years earlier than state pension age.

Mnd

You could also open a SIPP or personal pension and pay additional money into that

xylophone

https://forums.moneysavingexpert.com/discussion/comment/71233118#Comment_71233118

Your workplace pension is currently LGPS and you were formerly in TPS?

https://www.yourpensionservice.org.uk/news/?id=2015/08/21/79649&news=882&page=pr&_

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

typeractive

Thanks all!

Yes I was in the TPS, and now LGPS. I know my employer pension is better as the both the salary % contribution is higher, though it was the State Pension I was most interested in. I'd thought "higher earners pay more in, so get more out".

Some salaries literally end up with you paying out a lot more in tax and NI, but very little benefit to yourself (Yes I'm sure this is well known, but I've never really considered it!). I'm officially growing up and becoming grumpy! :rotfl:

AlanP_2

typeractive wrote: »

Thanks all!

Yes I was in the TPS, and now LGPS. I know my employer pension is better as the both the salary % contribution is higher, though it was the State Pension I was most interested in. I'd thought "higher earners pay more in, so get more out".

Some salaries literally end up with you paying out a lot more in tax and NI, but very little benefit to yourself (Yes I'm sure this is well known, but I've never really considered it!). I'm officially growing up and becoming grumpy! :rotfl:

Taxes and NI are not meant to benefit the individual payer directly though so yes higher earners pay more than those that earn less.

Personally I would prefer to be paying 40% tax as a higher earner than paying virtually no tax on a minimum wage job on balance :beer:

Silvertabby

Personally I would prefer to be paying 40% tax as a higher earner than paying virtually no tax on a minimum wage job Posted by AlanP

Exactly. I'm now retired, although I don't get my State pension for another 4 years, and pay tax (20%) on some of my occupational pension income. Would I rather be in my position - or would I prefer to pay no tax because my income is too low. What do you think.

marlot

typeractive wrote: »

T...Some salaries literally end up with you paying out a lot more in tax and NI, but very little benefit to yourself (Yes I'm sure this is well known, but I've never really considered it!). I'm officially growing up and becoming grumpy! :rotfl:

As 50% of the population don't pay tax any more (with the higher thresholds and various credits), the country needs people like us to pay for everything!

Dorian1958

I wish I was paying higher rate tax too, then I would be shovelling a lot more into AVC's. Reminds me of a former boss who at his retirement do spent the entire time grumbling about the 40% tax take off his lump sum (somehow wangled redundancy which exceeded £30k), while the half dozen basic rate taxpayers present were paying for his dinner. Never did get a thanks afterwards either.

FatherAbraham

AlanP wrote: »

Taxes and NI are not meant to benefit the individual payer directly though so yes higher earners pay more than those that earn less.

Your assertion about National Insurance is not really true. It remains in principle a contribution-based compulsory insurance scheme for workers.

Warmest regards,
FA