Workplace pension L&G

Jrose1927

Just need some advice on this my workplace pension with legal and general

Don't have a clue my percentage or my employers percentage of what goes in tried to log on online but it won't let me so I'm going to call them Monday

At the moment myself and my employer both pay around £20 a week into my pension

I'm looking to up my contribution will my employers also increase ? Also I read something about tax relief does any extra go in a week due to my tax I'm just unsure on the whole situation what's the maximum I can contribute and would this mean I pay less tax on my pay if I maxed my pension ?

Thanks in advance

Dazed_and_confused

On what basis are the contributions being made?

Not all of them mean you will pay less personal income tax.

Salary sacrifice?
Net pay?
Relief at source?

Jrose1927

It's a salary sacrifice

Dazed_and_confused

Salary sacrifice means you aren't contributing to a pension and you are not entitled to any pension tax relief.

You are agreeing to give up part of your salary in return for you employer contributing to your pension scheme.

You can save tax (and National Insurance) by not having as much salary being taxed in the first place. But the saving depends on how much you are earning.

Albermarle

I'm looking to up my contribution will my employers also increase ?

The employer has to pay a legal minimum, which is 3% and you have to pay also a minimum 5% ( you can opt out of the scheme altogether and pay nothing but this is NOT recommended)
There is nothing to stop you paying more . The employer does not have to match it but some will , up to a point . It is entirely up to them ,s o you will need to ask your employer directly.

Jrose1927

So if I was to start a Sipp alongside my workplace pension

Do I get tax relief on both ?

I've read alot on Sipp but I still can't get my head around a few things of course you invest in funds , if the fund does well you've gain more interest but if the fund decreases you'll lose money on your pension is this correct?

Dazed_and_confused

You will automatically get basic rate tax relief when you contribute to a SIPP or personal pension.

So if you hand over say £80/month the pension company, courtesy of HMRC, will add £20 tax relief giving you £100 in your pension fund.

It's possible you could also get a personal income tax saving but that depends on how much taxable income you have and where you are resident for tax purposes. For most people they would get an extra tax benefit if they have taxable income in excess of £50k.

I'm not sure SIPPs are the thing for you though. Investments don't earn interest, that is paid on savings and most pension money is invested not saved.

You might be better off with a stakeholder pension.

Jrose1927

So it's basically a pension where what ever you put it you get back plus the tax relief.

You cannot lose any funds in the meantime ?

Dazed_and_confused

No. You put cash in the pension wrapper and basic rate tax relief is added.

With a SIPP you then have to decide what do with that cash.

You could keep it all as cash so you couldn't lose money but the real value of it would go down to due to inflation.

With some SIPPs you get paid interest on your cash holding but this is often a nominal amount of say 0.1% or 0.2%. So you are still usually losing money in real terms due to inflation.

Or you could invest the money. There is then a risk you could lose some or all of your money. Or you could make decent investment returns. With a SIPP the responsibility for choosing the investments lies with you.

With a stakeholder pension the company will make the investment decisions for you (and all the other people invested). You could still lose money but you can generally make a high level choice so the investment matches your appetite for risk. Or lack of appetite for it.

This might be worth a read. I'm not recommending Aviva, there is plenty of companies to choose from, but they do explain how a stakeholder pension will work.

https://www.aviva.co.uk/retirement/pensions/aviva-stakeholder-pension/

cloud_dog

Jrose1927 wrote: »

So if I was to start a Sipp alongside my workplace pension

Do I get tax relief on both ?

I've read alot on Sipp but I still can't get my head around a few things of course you invest in funds , if the fund does well you've gain more interest but if the fund decreases you'll lose money on your pension is this correct?

It would be useful if you can confirm your annual salary.

If you have sufficient earnings then increasing your contribution to your works pension via salary sacrifice would be the way to go.

Alternatively consider using a Lifetime ISA.

Alternatively use a personal pension (stakeholder, SIPP, etc).

Dox

Jrose1927 wrote: »

So it's basically a pension where what ever you put it you get back plus the tax relief.

You cannot lose any funds in the meantime ?

Your pension fund can go up or down, depending on where exactly you have chosen to invest your pension savings (i.e. the type of fund - equities, deposit etc).

Have you read the basic information your employer must have provided when you were enrolled into their pension scheme? If not, have a go - and there'll be a helpline number you can call if stuck, or you could try TPAS for free, impartial help aimed at those who find pensions make their brain hurt! https://www.pensionsadvisoryservice.org.uk