Pension Vs Property ....what is best?

Marcon

krish2011 wrote: »

It is a small company and as part of the employee contract they dont provide pension contribution

...a contractual term they certainly can't enforce. See https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment/how-much-do-i-and-my-employer-have-to-pay for more information about the minimum amount an employer MUST pay if any worker meets the relevant criteria - and you certainly seem to.

MallyGirl

You definitely need to raise the lack of pension with your employer- even if the contract stated no pension when you joined, things have changed. They are legally required to contribute to one.

With 2 kids of 2 years I would not be wanting the hassle of being a BTL landlord on top. If you want to invest in property then do it as part of a diversified portfolio within a pension.

Johnnyboy11

Forget BTL, the numbers will never work out.
Save enough into a personal pension keep out of the higher rate 40% tax bracket, currently £46,350 and avoid the Child Benefit Charge, currently applied to earnings above £50k.
Invest pension savings into a Vanguard Lifestrategy fund, either the 60% or 80% depending on your attitude to risk. Use Vanguards own platform to keep costs down.
Save into an ISA, try to max out the £20k annual allowance, invest as above.
Check your State Pension status and make sure you are on target for the full amount at retirement.
Do all of the above for your wife, or if she's not working then pay £3,600 gross into a private pension for her.
Work out a plan to be financially independent by age 55, so you have the option to retire in the sun

Bimbly

As a higher rate tax payer, the tax advantages of paying into a pension are huge. As said above, to put £1 into a pension only costs you 60p.

Google it to find out what a great deal this is. For example, here's an article from Which?:
https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/tax-relief-on-pension-contributions-explained-a27f53z7qg3f

Laws have changed on buy to let to make the tax advantages of this sort of investment less attractive. Before the changes, pension would have beaten BTL. After the changes, that's even more the case. You could consider doing this sort of thing if you have a solid pension provision already. I would suggest BTL would not be a good move for someone in your position.

Google BTL landlord tax changes to find out more.

New laws mean your employer must auto enrole you into a pension. See:
https://www.thepensionsregulator.gov.uk/en/employers

They should do this sooner rather than later as they will liable for back payments of all the contributions they've missed. You should then look to increase your own contributions if you can (with the advantage of 40% tax relief!) to increase your pot, as you are 40 and closer to retirement than ideal, but NOT too late.

It's easiest to contribute extra through your employer's scheme. You could also set up your own pension in addition to your employer's scheme, although you would need to research which one. (EDIT: JohhnyBoy has made a good suggestion on this).

Best of luck.

michaels

If it is a small employer then also talk to them about pension contributions via salary sacrifice and splitting the employers NI saving, the extra profit for them is a good inducement.

TonyMMM

pension .....no brainer

atush

krish2011 wrote: »

It is a small company and as part of the employee contract they dont provide pension contribution

Doesnt matter, it is illegal for them not to offer a pension

atush

And as a HRTaxpayer, it is a no brainer. Pension.

dont_use_vistaprint

atush wrote: »

Doesnt matter, it is illegal for them not to offer a pension

Is it really a legal requirement to provide a contribution into an employee pension , I just though they now have to provide administration of a pension via payroll, and auto-enrolment for new employees that d not opt out , but were not forced to contribute themselves.

michaels wrote: »

If it is a small employer then also talk to them about pension contributions via salary sacrifice and splitting the employers NI saving, the extra profit for them is a good inducement.

How can you work out if this is being done or if the employer is taking the NI saving benefit for themselves ? I have SS on a part time employment and so get reduced NI but seems the employer may be making extra saving that could be shared with me ?

dunstonh

Is it really a legal requirement to provide a contribution into an employee pension , I just though they now have to provide administration of a pension via payroll, and auto-enrolment for new employees that d not opt out , but were not forced to contribute themselves.

It is very much a legal requirement.

The number of fines issued for auto-enrolment "errors" was 35,810 in 2017/18. A total of £42m in fines.

https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/about-automatic-enrolment/what-happens-if-my-client-doesn't-comply-or-is-late-complying

quote from above:
deliberately failing to enrol eligible staff and knowingly including false information in a declaration of compliance are criminal offences and may result in prosecution