paying extra int works pension 28 February 2020 at 10:48AM in Pensions, Annuities & Retirement Planning 8 replies 191 views

Mick70

if employer doubles the employee contributions up to a limit of employee 8% and employer 16% , is it worth still paying in more than that or should any other money you can afford be better off put into a savings account/ISA ?
thanks,
mick

Albermarle

Mick 70 - A thread a day ( or two today ) keeps the Doctor away  
If you are a higher rate taxpayer then you should maximise pension contributions as much as you can , especially if you will be a 20% taxpayer in retirement. If you are a basic rate taxpayer the advantage is still there but a lot less.

Mick70

Albermarle said:

Mick 70 - A thread a day ( or two today ) keeps the Doctor away  

Higher rate tax payer  - thanks
Ive got couple more questions yet my friend       shy bairns get nowt 

Brynsam

Mick70 said:

Albermarle said:

Mick 70 - A thread a day ( or two today ) keeps the Doctor away  

Higher rate tax payer  - thanks
Ive got couple more questions yet my friend       shy bairns get nowt 

Maybe put them all on one thread? It's easier to answer more helpfully if you see all the concerns/background together, otherwise you are getting responses in isolation.

JoeCrystal

Mick70 said:

if employer doubles the employee contributions up to a limit of employee 8% and employer 16% , is it worth still paying in more than that or should any other money you can afford be better off put into a savings account/ISA ?
thanks,
mick

If the employer does offer such a generous contribution rate, I will take it to the maximum possible. As for doing any higher, that depends on your overall plan, especially if you got other goals in mind. 

ratechaser

My pension scheme works at about those percentages as well (yes, lucky us, would be nicer if there was no upper earnings cap on the scheme but 1st world problems...). I'm currently paying another few percent on top with no extra top up from employer, just to ensure I'm using every bit of my allowance/carryover, and reduce my 47% tax liability.

It's really one of those no-brainer decisions...

Mick70

Brynsam said:

Mick70 said:

Albermarle said:

Mick 70 - A thread a day ( or two today ) keeps the Doctor away  

Higher rate tax payer  - thanks
Ive got couple more questions yet my friend       shy bairns get nowt 

Maybe put them all on one thread? It's easier to answer more helpfully if you see all the concerns/background together, otherwise you are getting responses in isolation.

sometimes other posters have similar queries but prefer not to ask themselves and start a thread , I will bear that in mind though if it is solely specific to my circumstances

P1Fanatic

Easy way to think of it is that you have already paid tax and NI before you can invest it in an ISA or Savings so you have already lost a massive chunk. But obviously putting everything into your pension doesnt give you flexibility so its a balance. I generally try to up my personal pension contribution by another 2% a year usually inline with annual pay rise so I dont even notice the difference in take home.

Fingers crossed that the rumours about the govt stopping the  higher rate tax relief on pensions is just a rumour. 

green_man

Albermarle said:

Mick 70 - A thread a day ( or two today ) keeps the Doctor away  
If you are a higher rate taxpayer then you should maximise pension contributions as much as you can , especially if you will be a 20% taxpayer in retirement. If you are a basic rate taxpayer the advantage is still there but a lot less.

I agree with this.  In particular if your employer does salary sacrifice and you are a higher rate tax payer it is unlikely you will find an alternative investment with anything like the uplift you will see in this scenario. Of course the equation might change at the Budget but as thinks stand then put as much as your higher rate salary into you pension as possible.