Lifetime allowance

Albermarle

One thing that occurs to me is that when changes are inevitably made, they are likely to make higher-rate tax relief less attractive (it could even be abolished). So I'm probably right to make large contributions now, because they can compound later.

This seems the right way of thinking .
You can always /stop slow down contributions in future, especially if HRT relief is changed , but you can never get back any tax relief you miss out on today.

Thrugelmir

alfabet wrote: »

It's achieved 9% pa over the last five years (100% all-world equities in a bull market).

Quantatitive easing has encouraged people to take more risk with their money. Higher market prices does not neccessarily equate to higher corporate profitability. The words of Sir John Templeton are worth remembering. "“Bull markets are born on pessimism, grown on scepticism, mature on optimism, and die on euphoria.”

alfabet

Quantatitive easing has encouraged people to take more risk with their money.

This wasn't a choice I made, it is the default investment strategy in the scheme for members of my age (so-called "lifestyling").

Thrugelmir

alfabet wrote: »

This wasn't a choice I made, it is the default investment strategy in the scheme for members of my age (so-called "lifestyling").

An investment of 100% in global equities is a high risk strategy. Other levels of portfolio risk are available.

alfabet

I don't quite follow your point, I'm not disputing that it's high risk.

"Lifestyling involves investing in riskier assets when you have a long period before drawing your retirement benefits."
https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/choosing-investment-funds/lifestyling

cfw1994

alfabet wrote: »

Thank you all for your replies.

cfw1994:

Interesting, I had dismissed LISAs because the tax relief isn't as good (in comparison to pension contributions) and access from 60 doesn't help with the "bridge to pension" years. Why do you think it's worth having one?

Actually, you are right.....under current rules, you can of course access normal pension from an earlier point: you are still a few years off, maybe that is 57 for you, but unlikely to be over 60, so perhaps a daft idea in hindsight.
A LISA does, of course, get effectively 20% in from the HMRC added....but if you are a high rate taxpayer, then the advantage is definitely to the pension....

FWIW (probably not much now my crazy LISA idea has been debunked!!), I personally agree with your "high risk 100% equities" strategy at your age....but I do appreciate others might disagree.

Thrugelmir

alfabet wrote: »

I don't quite follow your point, I'm not disputing that it's high risk.

"Lifestyling involves investing in riskier assets when you have a long period before drawing your retirement benefits."
https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/choosing-investment-funds/lifestyling

All investment comes with risk of many forms. Taking a high level of risk doesn't equate to higher long term return. Most certainly will suffer from greater volatility.

badmemory

But surely once the LISA has gained all the government funds it can, then start with other savings. Use those to get you to 60 & the LISA to fund 60 onwards until the pensions can be taken unreduced.

alfabet

I think you are confusing DB and DC pensions. I have a DC pension which can currently be accessed from 55, likely to rise to 58 by the time I get there. There is no ERDF in play here.

jamesd

alfabet wrote: »

I am currently contributing approx. £23k pa, making hay with higher-rate tax relief. I am lucky that my employer offers salary sacrifice, generous contributions of their own, and a 6% NI uplift on additional voluntary contributions

You can save more NI by sacrificing what the employer matches in all months and concentrating the extra in as few months as possible, going down to minimum wage. NI is calculated independently for each pay period so doing this maximises the amount that saves 12% instead of 2% employee NI. No effect on income tax's annual calculation.