Pension Lifetime Allowance

clifford_the_dog

I have about 900k in pensions and am 51 so knew already that the lifetime allowance could become an issue for me.  Should have saved more elsewhere 10-15 years ago instead of making 10% contributions.  Anyway, my question is.....what experiences have people had in asking their employer to pay employer pension contributions as salary instead? I am a mid-senior ranking manager in a global tech company and the answer was “no, not possible, but you can choose not to take the pension at all if you like”, which is kind of missing the point.  Given the info in this weeks’ budget about the lifetime allowance being frozen for several years, this is going to become more of an issue for many.  The double whammy is I have to write out a cheque to the inland revenue every year to pay tax on the contributions because I don’t get any tapered tax relief either as the money goes in.   Anybody out there who successfully asked their employer to reroute pension money to salary who is able to share experiences?  I’ve read that some of the big accounting and management consulting practices have done it, so it must be do-able but perhaps something where businesses are reluctant to over complicate internal processes. Many thanks.  

randompenitent

My former employer, also a "global tech company," offers cash in lieu of pension contributions. There are some conditions - I suspect you need to persuade them that you know what you're doing, but since I never got to the point of making the request, I'm not sure of the details.  Anyway, I guess you can point out that other employers offer this. 

EdSwippet

randompenitent said:

My former employer, also a "global tech company," offers cash in lieu of pension contributions. 

As a counter-example, my own former employer "global tech company" would not. Unshakeable stance, even when presented with evidence of its huge tax inefficiency relative to the alternatives.

Steve182

You said £900K in pensions, so more than 1 obviously.

Are you able to take 25% TFLS from any or all of them at 55? At your current age you may be borderline on age 55 or 57. 

That's what I plan to do, take TFLS's from 55 and progressively reinvest it all in ISAs (mine and OH's) up to our individual ISA allowances, and also invest some in my OH's pension and her share dealing account (she's a basic rate taxpayer so only 10% CGT) to shelter future growth from that money from LTA. 

Another thing to consider, if you plan a mix of higher/lower risk investments, keep the low risk/low return stuff in the pension and have the higher risk/higher growth stuff in the ISAs.

DairyQueen

Mr DQ was also refused the option to take salary as an alternative to pension contributions. His then employer was a global player in industrial safety. I wonder if smaller companies are more flexible?

Steve182

DairyQueen said:

Mr DQ was also refused the option to take salary as an alternative to pension contributions. His then employer was a global player in industrial safety. I wonder if smaller companies are more flexible?

I'm sure many small companies would, mine included, providing -
1. It was obvious that your pension provision was already adequate without need for further contributions
2. You accepted a reduced amount, to compensate for employers NI contributions on the salary enhancement

ratechaser

My employer - a very big global bank - offers senior staff the option of taking a 4k pension contribution, and the rest of what they would have paid (~16%) as cash - its structured to work for people that would feel the maximum impact of tapering, as opposed to being a lifetime allowance 'fix' - but it obviously helps in that respect as well.

cfw1994

You can always chose to use “safe low risk” funds, &  only continue to put enough in to get employer matched contributions.  

Any excess tax in the future is then the result of decent fortune, I would suggest....but the pensions are safer.
If you then have excess salary, invest in ISAs.
First world problems!