How to contribute out of the employer plan

Alfredodm

I'm a foreign father trying to help my son (he lives and works in London since end of 2018) giving additional contributions beyond the employer-employee payment of 8%.
Stating that the value of my son pension is at the moment very low (£ 3000) and that the employer doesn't want to contribute more than its 3%, I though to help my son with additional contribution on a private fund.
My questions are:
1) Do the forum rules allow to have advices from some experts of you on the private funds? If not, how to choose one of these? (even if I know that is useless to find a sort of reliability criteria)
2) it's worth, as a starting point, to give a sum of £25000/30000 or to give £5000/6000 for 5 years?
3) I have found a calculator but nothing I know how to get tax reliefs, and how and when it is possible, and therefore decide how and when to pay the additional contributions
4) a forth question is if it is possible/allowed to pay from a foreign country (but I think that the are no problem)
Thanks in advance
Alfredodm


looking for a reliable pension fund where give additional payments (beyond the employer-employee payment of 8%).
Can you help me?

xylophone

Does his workplace scheme permit additional contributions?

Example

https://thepeoplespension.co.uk/jargonbuster/additional-voluntary-contributions-avcs/

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/retirement/get-ready-for-the-vanguard-personal-pension

Above should be available in the New Year - might suit?

https://monevator.com/using-vanguard-lifestrategy-funds-life/

https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/tax-relief-on-pension-contributions-explained-a27f53z7qg3f

Rather than contribute direct from abroad, you might make your son a regular monthly gift which he could contribute to the pension.

Dox

Alfredodm wrote: »

I'm a foreign father trying to help my son (he lives and works in London since end of 2018) giving additional contributions beyond the employer-employee payment of 8%.
Stating that the value of my son pension is at the moment very low (£ 3000) and that the employer doesn't want to contribute more than its 3%, I though to help my son with additional contribution on a private fund.
My questions are:
1) Do the forum rules allow to have advices from some experts of you on the private funds? If not, how to choose one of these? (even if I know that is useless to find a sort of reliability criteria)
2) it's worth, as a starting point, to give a sum of £25000/30000 or to give £5000/6000 for 5 years?
3) I have found a calculator but nothing I know how to get tax reliefs, and how and when it is possible, and therefore decide how and when to pay the additional contributions
4) a forth question is if it is possible/allowed to pay from a foreign country (but I think that the are no problem)
Thanks in advance
Alfredodm


looking for a reliable pension fund where give additional payments (beyond the employer-employee payment of 8%).
Can you help me?

The simplest way to proceed is for you to simply give your son extra cash and he can then increase his personal contribution to his current scheme. You won't get tax relief, but he will, so you can give him a lower amount - say £4,000, and the kindly British taxman will then let the pension scheme provider claim a further £1,000 and add this to his pension 'pot'. This assumes your son is in something called a defined contribution scheme (which these days is almost virtually certain) and that employees can pay in more than the minimum - again, virtually certain they can.

P1Fanatic

As above you want your son to up his own contributions to his employers pension scheme as that will be tax exempt.

I find this is a good calculator (assuming its a salary sacrifice type)to show what increases in pension contribution will "cost" you per month. You can then see how much you would need to give your son each month to cover that % increase.

https://www.scottishwidows.co.uk/retirement/calculators-tools/how-do-you-pay-to-your-pension/salary-sacrifice/

Number75

I think it’s better for your son to take some ownership here. He’s a grown man living and working in another country. It’s very kind of you to give him money - but tell he needs to go and research the options and present them back to you.

Alfredodm

Sorry, but I’ve been sick in recent 20 days. I thank you very much for your response and I'll be back to you if I have further questions.
Regards
Alfredodm

xylophone

but I’ve been sick in recent 20 days.

Get well soon!

Alfredodm

to xylophone ant the other kind members (I'm just learning how to post, sorry...)

I visited the coming soon!Vanguard Personal Pension site. It costs only 0,15% as account fee, but SIPP isn't a risk by definition?

Moreover:
1) How to find a pension scheme/fund with which you can withdraw, after a certain period, a lumpsum or the total sum before the retirement date? And how to find a fund providing tax reliefs? For!example, with Scottish Widows (the Group Personal Pension of my son employer) you can opt out but you can't withdraw any money before the retirement!!

2) As I asked in december, since my son pot value is very low,!it's worth, as a starting point, to give him a sum of £25000/30000 or to give £5000/6000 for 5 years?!

3) since my son from this month will earn £ 49.500 (in 2019 the gross salary was £ 45.000), I think he could pay more contributions, passing by a contribution of 5% to 8% (the employer remains at 3%) and the rest could be paid by me with the above sums. Is this a right method to proceed, also considering tax reliefs?

4) I can't find a calculator to establish how much money to pay for the next 25/29 years to get a monthly pension of £ 2200!!

Thanks in advance

Alfredodm
!!

!!

kinger101

Your son is a basic rate taxpayer, so SIPP might not be the most tax-efficient method of saving for retirement.

For a SIPP, every 80 p he puts in from net salary is topped to to £1. But it effectively gets taxed at 15% in retirement. 85/80 = 1.0625

If he has a salary sacrifice scheme for his work scheme, his net contributions instead cost 68 p (as he also saves 12 p national insurance. 85/68 = 1.25

Is he's under 40, he can use a LISA. The 80 p of net income becomes £1 which is non-taxable. 100/80 = 1.25

xylophone

1) How to find a pension scheme/fund with which you can withdraw, after a certain period, a lumpsum or the total sum before the retirement date? And how to find a fund providing tax reliefs? For!example, with Scottish Widows (the Group Personal Pension of my son employer) you can opt out but you can't withdraw any money before the retirement!!

A pension cannot normally be accessed before (currently) age 55.

https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/when-can-i-take-money-from-my-pension

A LISA used for retirement cannot be accessed before age 60.

https://www.gov.uk/lifetime-isa


Regarding pension tax relief see

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

If you son wishes to contribute to a pension outside the workplace scheme, he can choose a stakeholder, personal pension or SIPP - basic rate tax relief will be claimed by the pension provider.

If he becomes a higher rate taxpayer, he will need to contact HMRC concerning additional relief.

JoeCrystal

Alfredodm, while your efforts to help out your son is commendable, I have to agree with Number75 on this topic. It really should be your son to do the legwork and the fact he is on such a high salary of £49,500 make it more necessary for him to do so. I am not sure I agreed with the principle of a parent helping out an adult child with a pension provision, to be honest, it should be entirely down to an adult child to work out his retirement provision.

Anyway, how old is he? The fact you mention 25/29 suggest that he is the late thirties to early forties?

Well, you can find a pension calculator on many sites, here is one of them: https://www.hl.co.uk/pensions/pension-calculator.

As you can see from the pension calculator, it can be rather expensive to aim for £26,400 pension income in such a short time.