Understanding pensions?

OldMusicGuy

UKSBD wrote: »

When it says you can take 25% tax free, if you have it in 2 or 3 diffeent places can you take 25% from each place?

If I die before taking anything out does it automatically pass on to the benificiary and the same rules apply?
ie, they could take 25% out and draw them down?

Yes to 1. If you die before 75, you can pass on everything tax free, it's different if you die after 75. Which is why if you should go to that site I mentioned, it will all be explained in detail there..... ;-)

xylophone

http://www.thisismoney.co.uk/money/pensions/article-5170985/Can-25-one-pension-leave-later.html

https://www.pensionwise.gov.uk/en/when-you-die

Try an appointment with Pension Wise for information.

kidmugsy

UKSBD wrote: »

I am my employer (work for own Ltd Company).

Fair enough: running a business means difficult trade-offs of advantages and disadvantages. You were wise to have the business contribute for you when it could afford it - nice saving in corporation tax.

atush

The new-style state pension dies with you, as I understand it.

not always. f either of a spouse has old State second pension- S2P then some of that can be inheritied still I think?

I was paying about £5k a year in to the Scottish Widows one up until about 3 years ago but paused it as are now paying of a BTL mortgage instead. I've always been a bit anti pension and pay down mortgages quicker instead (currently have main residence mortgage free and a 2nd property that should be paid of in next 10 years)

Paying off a mtg over pension contribs can be afoolish choice- depending on your mtg rate. As pensions attract tax releif (so a 100 contribution would cost you only 80 or even 60. so losing 20-40% if you dont use them. Over paying (in my case) a mtg of only 1%.

Nog to mention, over time, equities outpace the increase in property. So really a pension is better than paying off a mtg in most circumstances.

your circumstance

I am my employer (work for own Ltd Company)

When the company was doing well, the company was paying £4.8k a year in to it, I paused it as needed funds to buy and modernise a property, took a couple of years of work and haven't got the company back to the situation where it can pay that much in again yet.

I dont know how much tax your company pays, but this could have been/ ay be an expensive mistacke as your pension payments are an exense for your company so are deducted before paying corporation tax. So really you are losing all that money.

Might have been cheaper to borrow money to do the property renovations.

Dont you have an accoutnant for our business who could have explained all this to you?

UKSBD

I have been reading quite a bit, still a lot more to read though

A few quick questions

If I book a free appointment at https://www.pensionwise.gov.uk/en can I have another free appointment at later date or do they limit it to one?
It would be nice to go along to an initial appointment, do a bit more research then have another appointment.

I've now logged in to my Scottish Widows account
It has a value of £48k, I have made no personal payments to it, my company has paid £23k in to it and it shows 0 tax relief.
From that do I assume it was a salary sacrifice?

I will probably start paying in to this again direct from my company, is there a maximum the company can pay in to it in a year (I think that when I was paying in to it before I was matching my wages) can I do this again or can I pay more than my wages, also can it be paid in as a lump sum as an annual bonus just before my company year end?

MoneySavingUser

UKSBD wrote: »

I have been reading quite a bit, still a lot more to read though

A few quick questions

If I book a free appointment at https://www.pensionwise.gov.uk/en can I have another free appointment at later date or do they limit it to one?
It would be nice to go along to an initial appointment, do a bit more research then have another appointment.

I've now logged in to my Scottish Widows account
It has a value of £48k, I have made no personal payments to it, my company has paid £23k in to it and it shows 0 tax relief.
From that do I assume it was a salary sacrifice?

I will probably start paying in to this again direct from my company, is there a maximum the company can pay in to it in a year (I think that when I was paying in to it before I was matching my wages) can I do this again or can I pay more than my wages, also can it be paid in as a lump sum as an annual bonus just before my company year end?

Not sure about pension wise

No, it would be an EMPLOYER contribution not salary sacrifice - no tax relief would have been claimed because it was paid GROSS. The company would have saved corporation tax on the payment.

Usually £40k (+ any unused annual allowance form previous 3 years) - unless you have a very high level of taxable income >£110k in which it might get tapered down to £10k or you have taken any defined contribution benefits [in excess of the tax-free amount] (which you can do from age 55) in which case the MPAA of £4k is the limit. These limits are per tax year which may be different to your company's accounting year.



You can pay in more than your salary.


edit: yes, can be paid in as a lump sum, make sure you do it before your company year end.

UKSBD

MoneySavingUser wrote: »

No, it would be an EMPLOYER contribution not salary sacrifice - no tax relief would have been claimed because it was paid GROSS. The company would have saved corporation tax on the payment.

thanks,
What is the dirrerence between an Employer contribution and a salary sarifice?

Can you do both or is there no advantage in that?
(it's my own company if that has any bearings on the answer)

zagfles

UKSBD wrote: »

thanks,
What is the dirrerence between an Employer contribution and a salary sarifice?

Can you do both or is there no advantage in that?
(it's my own company if that has any bearings on the answer)

Sal sac is where you agree with your employer to give up some of your salary and instead the employer puts it into a pension. So it is an employer's contribution. Rules like minumum wage need to be accounted for, eg an employee can't sal sac below NMW.

UKSBD

zagfles wrote: »

Sal sac is where you agree with your employer to give up some of your salary and instead the employer puts it into a pension. So it is an employer's contribution. Rules like minumum wage need to be accounted for, eg an employee can't sal sac below NMW.

What does MoneySavingUser mean when he says- it isn't a salary sacrifice but an employers contribution.

What (if anything) is the difference?

My Stakeholder Pension was set up about 10 years ago by accountant.
All I really know was my company was paying £400 a month in to it by DD, I paused the DD a few years ago, is it just a case of restarting the payments or is there any paperwork I need to worry about?

OldMusicGuy

UKSBD wrote: »

If I book a free appointment at https://www.pensionwise.gov.uk/en can I have another free appointment at later date or do they limit it to one?

One only. It is free after all.