Increase pension or start investment or blend?

Niv

cloud_dog wrote: »

1. Does your employer pay you via 'salary sacrifice' / 'salary exchange'? If they do it would likely be termed the same/similar in your pay slip.
2. Do you have a partner, if so, are they under 40 years of age?
3. Just to double check... Is your current company pension a defined benefits (DB) / final salary scheme, or is it a defined contributions (pot of money) scheme?
4. If it is a DC scheme, whilst your company may have matched your contributions to the maximum, usually (although not always) they will allow you to simply contribute more (without matching the additional amount).

1&3, It is a smart DC pension
2, my wife is under 40.
4, I beleive they do allow additional payments. Would this be better than getting a SIPP / S&S ISA?

MaxiRobriguez

It'll likely be better than a SIPP, probably cheaper, and less hassle as everything in once place.

Also likely to better than a S+S ISA too, unless you plan to be a higher tax payer in retirement, which very few will ever have the luxury of.

Niv

MaxiRobriguez wrote: »

It'll likely be better than a SIPP, probably cheaper, and less hassle as everything in once place.

Also likely to better than a S+S ISA too, unless you plan to be a higher tax payer in retirement, which very few will ever have the luxury of.

ok, so sounds like if i want the money for retirement, pop it in my company pension. If I want it for anything else (but long term) a isa may be ok. Not a lot of point opeening a vanguard etc account


Thanks,

SonOf

LISA is also an option

MaxiRobriguez

Niv wrote: »

ok, so sounds like if i want the money for retirement, pop it in my company pension. If I want it for anything else (but long term) a isa may be ok. Not a lot of point opeening a vanguard etc account

Thanks,

Pretty much.

The only downsized of upping pension contribution is you're tied into a specific age as to when you can access that money. Currently 57 but could quite feasibly become 67 over the next few years. If you want to retire before then you may want to hedge your bets and put some in a S+S ISA which would be used as a stopgap to get you to the time when you could crystalise.

cloud_dog

MaxiRobriguez wrote:

It'll likely be better than a SIPP, probably cheaper, and less hassle as everything in once place.

Also likely to better than a S+S ISA too, unless you plan to be a higher tax payer in retirement, which very few will ever have the luxury of.

Niv wrote: »

ok, so sounds like if i want the money for retirement, pop it in my company pension.

I'm really not sure about that.

Utilising an ISA will provide some flexibility so a bit of mix 'n' match.

In relation to your answer to my question...

Niv wrote: »

1&3, It is a smart DC pension

Unfortunately that doesn't answer my question regarding Salary Sacrifice / Salary Exchange; in fact do you mean this auto-enrolment pension?

I'm going to assume your company does not make PAYE payments to you using SS (you therefore do not benefit from additional NI savings; 12% for a BRT payer).

Niv wrote: »

2, my wife is under 40.

In which case, with you being a BRT payer and in the near future unlikely to be a HRT payer I would suggest you investigate the options for utilising the option to open LISA in your wife's name. You can contribute up to £4k per year, receive a 25% bonus from the government (£1k), and can contribute until age 50. Only downside is that you cannot withdraw monies (without penalties) until age 60; although the big benefit is that all withdrawals are tax free. For a BRT payer (assuming access at 60 is acceptable) using a LISA is far more efficient than a pension (unless there are potential SS considerations).

Just to be clear...

MaxiRobriguez wrote:

Currently 57 but could quite feasibly become 67 over the next few years.

Personal pension access is currently age 55, with a review looking to increase it to 57, and with a longer term commitment to probably keep it in line with SPA minus 10 years (so, 58 at some point).

Niv

Thank you cloud_dog and Maxi. Very useful posts.


My pension scheme is not an auto enrolment pension. It takes the money before tax so i understand that I do benefit from reduced NI contributions - this is the 'smart' bit as i understand it (that's how they sold it to us when we switched a few years ago.


So, it sounds like it may be a good idea to spread the funds around a bit, such as:
1, increase pensions contributions
2, open a S&S ISA such as a vanguard life strategy - in my name
3, Open a LISA for my wife


The LISA options seems very limited with providers such as nutmeg, AJ Bell and Hargreaves Lansdown. Are there any other significant players i should be looking at?

Niv

Just been looking at my pension I am currently signed up to L&G passive lifestyle strategy which at this point in my life means it is broken down as follows:
0% cash
75% passive global equities (30/70)
35% passive diversified


I confess I do not really know what the 30/70 means nor what the difference between the global equities and the diversified really is.


10 years before retirement it automatically readjusts itself.


Clarification on the above aside, does that look sensible at this point?

cloud_dog

Niv wrote: »

My pension scheme is not an auto enrolment pension. It takes the money before tax so i understand that I do benefit from reduced NI contributions - this is the 'smart' bit as i understand it (that's how they sold it to us when we switched a few years ago.

Ok, we'll take it as being a SS payroll.

Niv wrote: »

So, it sounds like it may be a good idea to spread the funds around a bit, such as:
1, increase pensions contributions
2, open a S&S ISA such as a vanguard life strategy - in my name
3, Open a LISA for my wife

The LISA options seems very limited with providers such as nutmeg, AJ Bell* and Hargreaves Lansdown. Are there any other significant players i should be looking at?

I would prioritise 3 over 2 and I would consider going with YouInvest / AJ Bell. The reason for prioritising the LISA is that you can contribute far longer in to an ISA than you can in to a LISA, so once you reach 50, no more contributions.

* EDIT: You could run a regular saver for 12 months, then deposit it in to YouInvest, and incur only a single trading fee. Need to consider ongoing costs etc.

MaxiRobriguez

Niv wrote: »

Just been looking at my pension I am currently signed up to L&G passive lifestyle strategy which at this point in my life means it is broken down as follows:
0% cash
75% passive global equities (30/70)
35% passive diversified


I confess I do not really know what the 30/70 means nor what the difference between the global equities and the diversified really is.


10 years before retirement it automatically readjusts itself.


Clarification on the above aside, does that look sensible at this point?

The 30/70 is probably going to reference the percentage split between UK assets and non-UK assets.The 35% diversified is probably going to be a mix of some or all of bonds, commodities, precious metals and absolute return funds.

Need to know exact details before suggesting appropriateness - you should be able to find out, there should be some documentation on the fund details. However, you're in your early 40's, so if you had the appetite for it you'd probably want to ramp up the equity allocation from 75% and you'd probably want to reduce within that equity exposure the allocation to UK stocks, and go more global.