Final salary ending.

maxie014

Looks like my final salary pension will be closing in april.
A new dc pension is replacing it with a max matched company 9% contribution into a fund with 0.34% charges.
I am going to join and pay the 9%.
I have been paying avc of £75 a week for a few years but this will close as well.
I will have only 5-7 years max in this new pension,probably 7.
Would i be better to add the avc money into the into the new pension? Or would it be too short a timeframe in a fund?
You are allowed to pay more but it wont be matched.

shinytop

Your situation mirrors mine 7-8 years ago although I had 15 years to go then. Can you change your fund selections to cash or something lower risk? It's a shame to miss out on the tax benefits, especially if you're a higher rate taxpayer. Remember also you might not need all the DC money on retirement if you have a decent DB pension. That might mean you could leave (some of) it for longer than 5-7 years. I've been paying as much as I could afford into my DC scheme.

kidmugsy

maxie014 wrote: »

A new dc pension is replacing it with a max matched company 9% contribution into a fund with 0.34% charges. I am going to join and pay the 9%.

Good move. Tell me, will your contribution be by salary sacrifice (aka smart pension, salary exchange, ...)?

maxie014 wrote: »

I have been paying avc of £75 a week for a few years but this will close as well. I will have only 5-7 years max in this new pension,probably 7. Would i be better to add the avc money into the into the new pension? Or would it be too short a timeframe in a fund?

How old are you? Are you a higher rate taxpayer?

maxie014

kidmugsy wrote: »

Good move. Tell me, will your contribution be by salary sacrifice (aka smart pension, salary exchange, ...)?

Think its a smart pension.






How old are you? Are you a higher rate taxpayer?

Just turned 55 and a basic rate taxpayer.

kidmugsy

maxie014 wrote: »

Think its a smart pension. ... Just turned 55 and a basic rate taxpayer.

If you can make your further contributions by salary sacrifice that's pretty attractive.

You then have to decide what to invest the money in. I don't like the look of the stock markets at all at the moment (especially in the US). Cash or near-cash, gold, TIPS ... those are the sorts of things I'd be considering. Indeed am considering.

Dox

maxie014 wrote: »

Would i be better to add the avc money into the into the new pension? Or would it be too short a timeframe in a fund?

It'll have the same timeframe (and tax advantages) as your other contributions. Are you sure you understand how the new pension works? Might be worth checking - your question suggests you might be a tad hazy (along with 99% of your colleagues!).

maxie014

kidmugsy wrote: »

If you can make your further contributions by salary sacrifice that's pretty attractive.

You then have to decide what to invest the money in. I don't like the look of the stock markets at all at the moment (especially in the US). Cash or near-cash, gold, TIPS ... those are the sorts of things I'd be considering. Indeed am considering.

I have thought about the cash option in a sipp.

maxie014

Dox wrote: »

It'll have the same timeframe (and tax advantages) as your other contributions. Are you sure you understand how the new pension works? Might be worth checking - your question suggests you might be a tad hazy (along with 99% of your colleagues!).

Yes i understand that dox,but thought it would be silly not to take the matched 9%.
Just thought it would maybe not be a good idea throwing money into a fund for such a short time frame.
I think i will make enquiries of the pension dep of whether its a risk managed fund to a stated retirement date.

Anonymous101

With contributing via Salary sacrifice it is well worth making additional contributions IMO.

Due to the saving on National insurance as well as Tax, the difference between a higher rate tax payer and lower is only 10% overall.

From April 2019
Earnings under £50k 20% tax 12% N.I.
Earnings over £50k 40% tax 2% N.I.

Lower rate tax payers often miss the the NI out of their calculations and its a big factor. I would still contribute well over the matched amount regardless of whether i was in the higher or lower tax bracket.

Pension_Geek

Are you likely to breach the Lifetime allowance?

maxie014

Pension_Geek wrote: »

Are you likely to breach the Lifetime allowance?

No i wont be anywhere near that.