no pension

strongboes

FatherAbraham wrote: »

On your personal balance sheet, there's an important item missing.

That item is a liability.

It's called "provide an income for myself when I'm too old to be able to work any more, or don't want to", and it's a big liability.

Whether you balance that liability with assets in pension funds, or ISAs, it doesn't matter - the assets you've assigned to meet that liability are fettered. If you spend those assets on something else, then the liability remains unsatisfied.

My point is that money you assign for your retirement should always be viewed as inaccessible for pre-retirement consumption.

Once you've made that mental adjustment, it becomes a no-brainer to accept the hard access limitations of pensions arrangements, in order to exploit the taxation benefits.

If you really can't accept that you have to irrevocably put money away for your elderly self now, then your financial future is likely to be a catastrophe.

Thanks for the post, food for thought. I am obviously aware of the tax breaks of paying into a pension. Retirement has always seemed a very long way off, I am very much an entrepreneur with a strong work ethic but would obviously like to retire at some point!

The timing of my post is very apt, because just today a property I have been waiting to be disposed of, an ex council farm has just been put up. It is going to auction, needs at least 200k spending on it, and will swallow the entire 400k and more in purchase price, which brings me back to what I said about allocating funds that cant be used.

strongboes

kinger101 wrote: »

THIS!

It will probably be the best money you've ever spent, as you'll save an enormous amount in tax and national insurance once you have a proper pension in place.

Yes this is a possibility thanks.

strongboes

Thrugelmir wrote: »

Excess of holiday lets generally. Seems to be an increasing amount coming onto the market for sale. Far from a high safe return.

I know my area very well, my parents have a holiday let for their pension basically although still working, and they gross 35k a year so my 10k is a very conservative estimate although different property of course etc. but thanks.

strongboes

xylophone wrote: »

You and partner do have life insurance to cover the repayment of the mortgage etc in the unfortunate case of your early demise?

You could look into contributions to a pension for you and for your partner - in her case, as she has no relevant income, this would be limited to a net £2880 - the pension provider would claim tax relief of £720 and add it to her pot.



You might consider the implications for Child Benefit of pension contributions.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/reduce-high-income-child-benefit-charge/

https://www.limitedcompanyhelp.com/paying-into-a-pension-from-your-limited-company/

The house is in my name solely, I have life insurance my partner does not. She is a little younger than me at 25 and is studying an OU degree so is yet to embark on a career.

strongboes

dunstonh wrote: »

You havent had to buy an annuity at all from 2015 and prior to that, bar some very small exceptions, you were not required to buy an annuity before age 75 for many decades.

You can access the money after age 55. It is a pension after all.

You need to start considering your life as a whole and not just now. Pension is geared for later life.



Just think how much lower it would have been had you been using a pension.



Yet the pension has the same investment funds and the same charges and better tax efficiency than the ISA. You paid corporation tax or income tax/NI (as your salary seems high for a director - most shareholding directors only take income to the primary threshold or the personal allowance with dividends above that. A salary of £65k is very inefficient. How much in dividends to you take above that?) A pension would reduce corporation tax and get money out of the company with no income tax/NI.

Maybe you can still reduce the impact before you sell up as you are able to use carry forward as well as this years allowance.

You are missing a trick through lack of knowledge and understanding and perhaps some anti-bias that is misplaced. At least you have posted here to learn more. Now it will depend on whether you take in what is being said or just ignore it.

I am in a very unique situation, my salary was 150k, then reduced to 100K to reduce tax, and now at 65k. I am a director and shareholder in my company, but the company makes no profit and so no dividends are payable. The company is funded by an investor, and we develop unique technology with a view to commercialisation at some point near term. I am selling a % of my equity to raise the 400k, it will qualify for entrepreneurs relief and will be taxed at 10% less my cgt allowance.

My isa holdings and investments are very highly speculative at this point. No trackers etc.

strongboes

Marcon wrote: »

Of course you should think about pensions, if only to decide they really aren't for you (although from what you've said, it's hard to see why they wouldn't be).

You don't have to buy an annuity.Where've you been since the famous pension freedoms were introduced four years ago? Have a look at https://www.pensionsadvisoryservice.org.uk/about-pensions or (better still) take some proper, paid-for advice to ensure you are on the right track financially.

A pension has never been something i've considered at all, for the last 6 years i have averaged 80/100hrs a week developing my business so that's where I have been so to speak.

Yes the drawdown option would be my route from the reading I have done this morning. I can probably contribute enough to take me to the 40% threshold at the moment depending on what happens with property. Can anyone do the calculation of how much this would be, my company would put in the minimum by law I suppose equivalent to auto enrolement.

atush

Dazed_and_confused wrote: »

I know people often subsequently provide more detail which means the original post turns out to be very misleading but at face value this means you are missing out on about £2.5k in Child Benefit (or are getting it and later repaying it).

If you paying yourself 65K in salary and not dividends then you need a new accountant. (can now see there are no profits so you cant take this route) And even if you were, paying into a pension is a no brainer- 100 into a pension only costs you 60. But as above, paying into one on your behalf by the Limited Co is the best way to go. You need to at least bring down your compensation so you get CB back, and are not paying HRT.

Your non working OH can pay in 2880/yr which is grossed up to 3600 by HMRC