Are small pots worth doing?

ffacoffipawb

I am going to exceed LTA.

if i pay into my employer scheme via salary sacrifice I get an NI saving plus half the employer NI.

If i reduce my conts to try and get 3 small pots elsewhere, I forego the NI saving but no LTA charge as small pots do not count towards LTA.

i think that any gain is marginal at best and may not even be a gain.

Basic rate taxpayer before and after any reduction to employer scheme.

Worth bothering with 3 small pots or not?

Its obviously only going to be about 3% of LTA so only a small gain, if any.

Thanks

EDIT could wait until i retire to build up any small pots i suppose?

Marcon

You need to do the detailed sums and decide if it's worth it - only way to find out.

ffacoffipawb

Marcon wrote: »

You need to do the detailed sums and decide if it's worth it - only way to find out.

Not obvious.

£100 gross into pension actually gets £106.90 into pension. Less 25% LTA charge gives £80.17 then deduct 20% tax gives £64.14 in the poxket. I keep 64.14% of the amount I paid into pension.

£100 gross into separate pension costs me an extra 12% plus 6.8% loss of NI savings. So cost to me is £118.80. Out of the pension I get 25% tax free so end up with £85.00 so I keep 71.54% of the cost.

So i gain an extra 7% for every £100 so for 3 small pots totalling £30k, the max saving is about £2k.

Obviously differences in investment returns would dwarf this.

Probably easier to sal sac until retirement then build up the small pots afterwards.

Is there any flaw in this logic?

Thanks

kidmugsy

ffacoffipawb wrote: »

no LTA charge as small pots do not count towards LTA.

Thank you; I didn't know that. Alas, nor do I know anyone who seems likely to gain by it.

ffacoffipawb

kidmugsy wrote: »

Thank you; I didn't know that. Alas, nor do I know anyone who seems likely to gain by it.

They may not trigger MPAA reduction either.