Nearing LTA + salary sacrifice

AnotherJoe

I'd pay into an ISA, gives you more flexibility in terms of retirement date.

CRAIGSVILLE1

unkle said:

Personally i'd start paying into an ISA, it's broadly cost neutral (aside from your maintenance) and withdrawals will of course be tax free. If you continually pay into your pension, once you start drawing you'll likely to be paying income tax on some anyway regardless of the LTA taxation.

Does your employer pay 9% regardless fo what you pay? if so just let them pay the 9% to keep it increasing.

Have to pay at least 6% to get 9% from employer.

CRAIGSVILLE1

zagfles said:

When you transferred the DB pension was the potential for LTA issues properly examined and explained by the IFA? We've seen examples here of DB pension transfers which cause LTA issues seemingly being ignored - there might be a case for mis-selling.

The way the LTA works means it hits DC schemes far harder than DB, so a transfer often causes LTA problems which wouldn't have existed had the pension remained in the DB scheme.

Yes, I knew exactly about the LTA when I transferred. CETV was 40x , so was very attractive.

Albermarle

CRAIGSVILLE1 said:

unkle said:

Personally i'd start paying into an ISA, it's broadly cost neutral (aside from your maintenance) and withdrawals will of course be tax free. If you continually pay into your pension, once you start drawing you'll likely to be paying income tax on some anyway regardless of the LTA taxation.

Does your employer pay 9% regardless fo what you pay? if so just let them pay the 9% to keep it increasing.

Have to pay at least 6% to get 9% from employer.

So keep paying the 6% !

CRAIGSVILLE1

Yes, I was considering doing this , and putting more in an ISA

zagfles

pjread said:

I'm not sure the 2% NI saving is enough of a kicker on its own given political etc risk, who knows what any colour of government might think is a good idea in 5+ years time.  Maybe if the employer kicks in some or all of the employer NI saving too it would start to look more compelling. 

Political risks work both ways. For instance there's talk of a wealth tax or capital levy (eg as happened in Cyprus) to help pay off some of the massive govt borrowing this year. It could be argued that pensions should be exempt - since there's already a similar concept with the LTA, which has already been massively reduced, plus NHS doctors with their high salaries and very generous NHS pension scheme are likely to be amongst the groups hardest hit with extra taxes on pensions. Hitting NHS workers never makes good headlines, nor does a "raid on pensions" at a time the govt have been encouraging people to save in pensions.

Risks both ways but personally I feel there's less risk inside a pension than outside.

cfw1994

CRAIGSVILLE1 said:

cfw1994 said:

CRAIGSVILLE1 said:

Hi all,
Currently , I am paying approx £20K p.a  into my DC pension salary sacrifice  to reduce my 40% tax to 20% , and my employer pays in 9% on top. I also pay child maintenance to my ex, and I save approx £2K p.a this way because I am not earning as much in their eyes.
I have transferred my old DB pension into a SIPP , and both combined are knocking on the LTA . I have 6 years left in employment until I am 55.
I have done a rough calculation, and I think I would approx break even tax wise , if I was to still keep paying into my pension to save tax , and pay the 55%  LTA fee on the excess, compared with reducing my pension contributions, and pay 40% tax on my salary, and put some into an ISA.
Does anyone have some sort of calculator for me to double check this complex situation??

Thanks

Craig

No useful ideas, but in your shoes I’m not sure my concern would be to reduce child maintenance, particularly if you are knocking on the LTA - why not just....er.....help maintain your child a bit more? 

If it is “paying the ex” that is the issue, perhaps open some investment to pay that 2k you save direct to a fund for your child.
Sorry if that doesn’t help, and maybe you already do that.

We had a good friend who left his wife and family, choosing to do so when their kids were 18 specifically to avoid having to pay for their uni education, and it was a really nasty thing to do.  Luckily for her (& their kids), the large friends group we have saw this selfish behaviour for what it was.  Pretty sure he thought everything would carry on as before.  For him, it didn’t.   Bizarre behaviour.

Hi, thanks for your info, but I have been paying 10 years of child maintenance, and I am happy to pay a few more years to contribute to the upkeep of my kids.
I also put money into a junior ISA , and a pension for them at moment. 
The ex, and her wealthy parnter have no idea I do this , nor would they think of doing it theirselves.
TBH , if I could afford to not give the ex more, and put more into kids accounts, I would.

Just on that topic of a new wealthy partner.....https://www.stowefamilylaw.co.uk/blog/2010/02/19/maintenance-payments-and-a-new-partner-bad-news-for-cohabitees-part-2 - could be worth a read.    I have NO legal experience of this, and wish you well!

unkle

CRAIGSVILLE1 said:

unkle said:

Personally i'd start paying into an ISA, it's broadly cost neutral (aside from your maintenance) and withdrawals will of course be tax free. If you continually pay into your pension, once you start drawing you'll likely to be paying income tax on some anyway regardless of the LTA taxation.

Does your employer pay 9% regardless fo what you pay? if so just let them pay the 9% to keep it increasing.

Have to pay at least 6% to get 9% from employer.

Decision done then, pay 6% so employer pays 9% and fill up your ISA with the remainder.