Retirement Saving

Notjustamum_2

Background - I am currently 52. I used to work for the doomed Equitable Life, I had a reasonable pension scheme and had transferred previous personal pension to them. They went down the pan shortly after I left to start my family - my pension is currently projected at around £500 per annum!  After leaving them I was a SAHM for 15 years before returning to work term time only. My current pension scheme is pretty good percentage contribution wise, employer contribution is 20%, employee is 5.5% but I earn below the tax threshold so the ACTUAL amount is not high. 

We have recently been able to reduce the amount we have been supporting our daughter with and I want to save this money towards my retirement.  As I don’t pay any tax at all I don’t think I get any tax relief so don’t know whether to lock it in a pension or save in some form of isa.  

Any advice?  I am currently looking at a monthly amount of £300 - £350. 

dunstonh

 my pension is currently projected at around £500 per annum!

Ignore that.  What is the current value?  (projections tend to be pessimistic and due to the assumptions used, understate what is actually likely).

As I don’t pay any tax at all I don’t think I get any tax relief so don’t know whether to lock it in a pension or save in some form of isa.  

You do get tax relief.  Pension trumps ISA in most scenarios as long as the objectives match (i.e. you intend to use the money in retirement and not before).

Dazed_and_C0nfused

If you contribute to a "relief at source" scheme you will get basic rate tax relief irrespective of whether you are actually paying tax or not.

Personal contributions to a SIPP or personal pension will be relief at source.

Your company scheme may be net pay which is unlikely to be good for you although it can mean other tax savings are possible.

Notjustamum_2

To answer questions so far….

My current pension is 20% of gross pay from employer and 5.5% from me.  I earn just over £1000 gross pm.  The only deductions are my pension contribution and NI. 

My old Equitable life pension has less than £20000 in it. 

Dazed_and_C0nfused

Notjustamum_2 said:

To answer questions so far….

My current pension is 20% of gross pay from employer and 5.5% from me.  I earn just over £1000 gross pm.  The only deductions are my pension contribution and NI. 

My old Equitable life pension has less than £20000 in it. 

If the current pension is "net pay" then it will only be getting the 5.5% (from you) and your taxable pay will be c£945.  In this case it might be worth you looking at whether Marriage Allowance will save you (as part of a couple) some tax.  You may in a position where you could make yourself pay a little bit of tax to save your spouse £252.

If it is "relief at source" then it will be getting 6.875% from you (including basic rate tax relief) and your taxable pay will be just over £1,000.

Any seperate relief at source SIPP or personal pension you start will get 25% added to whatever you contribute irrespective of whether you are paying tax or not.

Albermarle

So if we say for arguments sake ,that after your 5.5% contribution your remaining gross earnings were exactly £1000 gross per month .
You could add a maximum £800 a month to a pension and £200 tax relief would be added. 

Notjustamum_2

Marriage Allowance doesn’t apply to us as husband is a higher rate taxpayer. 

Figures from payslip gross salary 1020.85. Deductions NI -26.86,  pension -56.15
employers conts NI 39.17, pension 207.23. 

Net pay £937.84

so does not look like it’s “relief at source”. 

I did look at AVCs with my work pension but they advised that as a non taxpayer I wouldn’t get any tax break so should look for further advice. 

xylophone

If you contribute to a personal pension, you will get tax relief even though you do not earn enough to actually pay tax.

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

Might the above suit?

You could opt for the Target retirement portfolio if unsure where to invest.

dunstonh

I did look at AVCs with my work pension but they advised that as a non taxpayer I wouldn’t get any tax break so should look for further advice. 

AVCs are a different product to personal pensions.  If the AVC is collected via salary sacrifice then it wouldn't get tax relief.   The PPP/SIPP/SHP  would be paid net of basic rate relief irrespective of your tax position.

Clueless56

If your old ELAS pension is now with Utmost, have you reviewed the funds it is invested in?  If you just accepted those suggested at transfer, they're cautiously invested.  I dialled up the risk on mine for growth.

Reg_Smeeton

Notjustamum_2 said:

 before returning to work term time only. My current pension scheme is pretty good percentage contribution wise, employer contribution is 20%, employee is 5.5% but I earn below the tax threshold so the ACTUAL amount is not high. 

Do you work in a school / local government? Those contribution rates look like they are for the LGPS....