Is Paying £2,880 Into A Pension Moral For The Better Off

drumtochty

There are a number of posters on this forum retired or getting there who either themselves or their partners will have retirement incomes just below £10,000, That person pays £2,880 a year into a Sipp to get the £720 tax relief. If one of the partners has no earned income. They can both do that .

Let's say for this discussion that one partner in retirement will have a combined state and occupational pension income over £30,000 a year.

Is it reasonable for the that couple to take that tax relief for the lower earner in retirement when in a lot of cases the tax has been paid by breadwinners in a family who are bringing up kids on a salary less that the retirees partner?

Just a thought for the day!

Mistermeaner

yes it is

crv1963

As long as the person follows the rules then yes I think it reasonable. With a combined 30k pension the partner will likely be paying tax, working as a team minimising tax isn't against the rules, avoiding tax is.

eskbanker

drumtochty said:

Is it reasonable for the that couple to take that tax relief for the lower earner in retirement when in a lot of cases the tax has been paid by breadwinners in a family who are bringing up kids on a salary less that the retirees partner?

Just a thought for the day!

You'll twist yourself into all sorts of knots if you try to correlate beneficial use of tax breaks with whoever paid the tax in the first place, it really doesn't work like that, never has and never will!

soulsaver

crv1963 said:

As long as the person follows the rules then yes I think it reasonable. With a combined 30k pension the partner will likely be paying tax, working as a team minimising tax isn't against the rules, avoiding tax is.

Pedant: Avoiding tax is not against the rules; evading tax is.

Albermarle

I wouldn't be against it where the earning partner was on £30K . If it was a lot more than that I would wonder whether anybody could be bothered with all the extra admin , for £60 a month ,  especially as probably already operating a number of accounts , SIPPS etc. I know this is an MSE forum but there is also the law of diminishing returns .

SonOf

Plenty of retired people bed & pension every year (i.e. move £2880 of their investments into the pension wrapper to get £720 relief).    The rules allow it and it is part of using the pension tax wrapper.    Nothing immoral about it.    If you have morality concerns then you could equally apply it to S&S ISAs, LISAs, offshore & onshore investment bonds or any tax wrapper that handles taxation and reliefs in a different way to unwrapped.

SmashedAvacado

As someone who is better off, i would say that i contribute a lot more than 6 figures in tax each year. I feel like i make an adequate contribution. if i am able to save some tax, then i have no problem with this. In terms of the admin involved, its once bank transfer to the pension company, and one line in the tax return. that's worth £720 of most people's money. 
The benefit is not really £720 in any event, because the pension is taxed on the way out - but the fund can grow without tax and a proportion can be taken out tax free which. 
The government needs to encourage people to save as otherwise they will be a burden on the state. So giving incentives for people to do this - even wealthy people, is a good thing. 

Mr_Countdown

Hi. Is anyone able to tell me a) what is the maximum pension I could take per year and b) the most I could earn gross/net per year and still be able to pay £2880 into a Sipp to get £720 tax free?
I’m just a few years from 55 and am considering reducing hours to around minimum wage at 55 or even retiring if I can afford it hence why I ask if anyone can help with these figures so I can plan a bit. 
Many thanks. 

Andrew31

Questioning morals of those who follow the rules is pretty poor form.  

Andrew31

Mr_Countdown said:

Hi. Is anyone able to tell me a) what is the maximum pension I could take per year and b) the most I could earn gross/net per year and still be able to pay £2880 into a Sipp to get £720 tax free?
I’m just a few years from 55 and am considering reducing hours to around minimum wage at 55 or even retiring if I can afford it hence why I ask if anyone can help with these figures so I can plan a bit. 
Many thanks. 

Your question doesn't make any sense.  Reducing hours to minimum wage?   
You dont get £720 tax free, contribution tax relief is added.   
Under age 75 you can pay in £3600 no matter what you earn as long as you dont see it as morally unscrupulous.