Nest or Sipp or..? Convince my OH..?

soulsaver

I'm nagging my OH to get her savings working harder & make better provision for her pension.

I need to do some convincing so need to be sure of the facts but know little about latest pension rules & Nest:

I see additional pension contributions as prob her best option - pay extra in while a BRTP, hopefully let it earn, take it out whilst/if a non tax payer.

So, I know nowt about Nest where she currently pays (think)5% of her salary & 3% contributed by her employer.

I see she can make direct contributions via the Nest webby, but before I encourage her down that route, I'd like to understand the process/mechanics and other options.

She is aged 55 and other than full SP (at 66) has little pension provision. She's been in the Nest 2031 scheme for 6 months or so with current employer.

She's a BRTP earning c.£40k. We don't have dependants.

Correct me if I'm wrong, but AIUI she's allowed to contribute directly to her pension in this tax year (inty) up to her earned income (inty) less any contributions via her salary.

I've asked her to find out from her current employer whether there is any employer matching available for additional contributions (unlikely IMO).

So, for starters:

1) Would a SIPP or anything else be a better alternative to Nest?

2) Does she pay in, say, £20K to Nest (or SIPP) who claim £5K from HMRC= total pension contribution £25K? Or does she need to claim tax relief from HMRC?

3) Is there any easy way for her to find her current tax year's earned income & pension contribution?* Like from her HMRC online account?

4)Is there an opportunity to pay in any extra related to previous tax years earnings?

Help appreciated.

*Complicated - earlier in this tax year her previous employer formed a joint venture with a local council & AIUI she was tupied over but with an enhanced pension scheme, maybe LGv - but only stayed a few months.

Jerben

1) Would a SIPP or anything else be a better alternative to Nest?
-Either would do. (With Nest you would save on admin and not have to think about what to invest in)
2) Does she pay in, say, £20K to Nest (or SIPP) who claim £5K from HMRC= total pension contribution £25K?
YES
Or does she need to claim tax relief from HMRC?
NO
3) Is there any easy way for her to find her current tax year's earned income & pension contribution?* Like from her HMRC online account?
Payslip?
4)Is there an opportunity to pay in any extra related to previous tax years earnings?
No. She is limited to 'this years earnings', ie 40k

MarkCarnage

I think that there may be a bit of ambiguity around Question and Answer 4.

Jerben correctly notes that she is limited in total to current year earnings, which coincidentally happen to be the same figure as the annual pension contributions limit of £40k. However, she can of course pay a lot more than she is currently paying in and still be below that limit.

Also, you state her earnings are about £40k. If the 'about' means in practice they are £45k, then there would be headroom to carry forward from a previous year to allow total contributions of up to £45k in this year.

Albermarle

She is limited to 'this years earnings', ie 40k

She is limited to this years gross earnings . So she can contribute £32K and HMRC will add £8K.

1) Would a SIPP or anything else be a better alternative to Nest?

NEST is a simple pension with only a handful of alternative fund choices. A typical SIPP will have about 3000 Choices . So if you 'nowt about Nest' , then it is unlikely that a more complicated product will be suitable for you/ your partner.

Dazed_and_confused

2) Does she pay in, say, £20K to Nest (or SIPP) who claim £5K from HMRC= total pension contribution £25K? Or does she need to claim tax relief from HMRC?

She may be eligible to a small amount of additional tax relief from HMRC on top of the basic rate relief the pension company will add.

This depends on where she is resident for tax purposes.

greatkingrat

Albermarle wrote: »

NEST is a simple pension with only a handful of alternative fund choices. A typical SIPP will have about 3000 Choices . So if you 'nowt about Nest' , then it is unlikely that a more complicated product will be suitable for you/ your partner.

The problem with NEST is they charge 1.8% on all contributions. For a small regular contribution that may not add up to much, but if you are thinking about paying a large lump sum it could cost you several hundred pounds.

Marcon

Given how little you both know about pensions, and the modest sums involved, NEST is probably no bad idea.

soulsaver

Jerben wrote: »

1) Would a SIPP or anything else be a better alternative to Nest?
-Either would do. (With Nest you would save on admin and not have to think about what to invest in)
2) Does she pay in, say, £20K to Nest (or SIPP) who claim £5K from HMRC= total pension contribution £25K?
YES
Or does she need to claim tax relief from HMRC?
NO
3) Is there any easy way for her to find her current tax year's earned income & pension contribution?* Like from her HMRC online account?
Payslip?
4)Is there an opportunity to pay in any extra related to previous tax years earnings?
No. She is limited to 'this years earnings', ie 40k

I didn't consider her payslip, I assumed it would only show her earnings with this employer and not the earlier two?

AlanP_2

soulsaver wrote: »

I didn't consider her payslip, I assumed it would only show her earnings with this employer and not the earlier two?

If they are really "new employments" she would have been given P45s setting out earnings / tax etc. that the new employer would have used when she joined them.