How much pension to pay

zutman

I’m 53 And My gross pay is 58k i pay 5% pension and my company pays 3 I don’t have any dept, to help me with tax how much pension should I pay to hit the sweet spot, 

thanks 

cloud_dog

Are you paid under a Salary Sacrifice arrangement or is your workplace scheme a 'net pay' or a 'relief at source' scheme?

ewaste

At a minimum you'd want to take yourself out of the 40% higher rate tax bracket so about 13-14% of your Gross Pay would do that.

El_Torro

As mentioned avoid paying 40% income tax by putting extra into your pension, if you can afford it. 

If you can afford to / need to invest more you can put even more in your pension, or pay into a Stocks & Shares ISA. The pension is more tax efficient but the ISA is more flexible about how / when you can access your money. 

Since you can put up to £20k a year into an ISA you probably won’t need any other tax wrappers other than a pension and ISAs.

zutman

Its taken from gross and goes into a standard life pension, I also have approx 60k sitting in a Scottish widows from my self employed days 

zutman

So I have just increased my payment to 15% and see what happens to my net pay 

Dazed_and_C0nfused

Taken from gross doesn't differentiate between net pay (reduces the amount of salary you pay tax on) and salary sacrifice (reduces the amount of salary you pay tax and National Insurance on).

ratechaser

zutman said:

So I have just increased my payment to 15% and see what happens to my net pay 

15% gross contribution based on your salary is definitely the sweet spot in terms of just bringing you under the 40% tax threshold - assuming 58k is everything, no bonuses, benefits in kind etc that add to taxable income?

If so it means that the £725 you have going in monthly (along with another £145, being the 3% your employer adds) is only costing you about £420 a month in net pay terms.

In other words, you are basically doubling your money on the way in....

of course, whether this amount is enough to provide a retirement income to meet your needs is a very different question...

MEM62

zutman said:

I’m 53 And My gross pay is 58k i pay 5% pension and my company pays 3 I don’t have any dept, to help me with tax how much pension should I pay to hit the sweet spot, 

thanks 

Tax is only one influence on the decision.  The other, and perhaps more important, is what kind of retirement you want. You mention that you have £60K in another pension but not how much you have in this.  What is your target retirement income and how much do you have in pensions in total already?