£40k into pension?

Albermarle

arty688 said:

Interesting, So when coming close to retirement the best thing to do is to put as much as you can into your pension less the £40k and leaving yourself £12.5 as tax free earnings and top up your salary with savings as you won't need savings when you retire. O because it will be in the pension pot. Or you could even use 0% credit cards or re mortgage to cover you income in the last couple of years..

If you just add savings to the pension , it has the same effect , as long as your earn sufficient to get  enough tax relief.

as you won't need savings when you retire.

Some cash savings are usually recommended as an emergency fund at least 

MallyGirl

I have certainly let my mortgage creep up rather than paying it off in the last couple of years. This has allowed me to contribute the full £40k into my pension but also to ramp up the balance ready for a low rate remortgage fixed for the 5 years till I retire. Not everyone would be able to (its an offset mortgage) or be comfortable with the approach but it works for me.

Bemma

MallyGirl, do you have a mortgage provider in mind for 5 year fix offset?  I'm following a similar strategy, but my current mortgage deal is going to expire soon and my providers current offset deals are rubbish (First Direct).  My current mortgage is relatively small and 70% offset, so cheap at the minute, but will start to cost me more as I use my savings to supplement income as I SalSac £40k into my pension. 

3stones

MallyGirl said:

I have certainly let my mortgage creep up rather than paying it off in the last couple of years. This has allowed me to contribute the full £40k into my pension but also to ramp up the balance ready for a low rate remortgage fixed for the 5 years till I retire. 

We are doing similar here with our offset mortgage while interest rates remain low. Last year we extended the loan to age 70 from the existing 60. Currently putting the equivalent of annual earnings into pensions. If mortgage rates remain as low as they are we might even leave it then use a years worth of the state pension at 67 to clear it. This is our main tactic too getting three extra years of retirement from age 57 without touching the DB's until NRA at 60. We do have the funds aside just in case mortgage rates do start to go on an upward curve.

london21

I thought there is the lifetime allowance of £1,073,100. I thought this was not taxable? 

MallyGirl

Bemma said:

MallyGirl, do you have a mortgage provider in mind for 5 year fix offset?  I'm following a similar strategy, but my current mortgage deal is going to expire soon and my providers current offset deals are rubbish (First Direct).  My current mortgage is relatively small and 70% offset, so cheap at the minute, but will start to cost me more as I use my savings to supplement income as I SalSac £40k into my pension. 

We are just going 5 year fix standard repayment rather than offset. Santander at 1.16%

Madrick

antdon said:

Hi All

A very naive question, so please be gentle

I am 61
I already receive a small pension from a previously deferred Superannuation pension..  £6.5K pre tax

I also have a current pension at work with Aviva currently worth approx £75k

I have approx £40k sat in a bank languishing at nearly no interest.. 

I  have considered putting this into my Aviva pension..

My questions are 
1.   is it worth it?  I believe the government add 25% tax relief??   but.
2.  Surely if I add this to my pension, when i come to drawing this down I will be paying tax on 25% of it..

So, is it really worth doing?
 

Are you married?

If so you could put £20k in your pension and £20k in your other half's
As long as she has earnings above £25k

If not pay £20k in yours now, stick the other £20k in a s & s ISA or premium bonds, until next tax year, then take it out and pay into your pension

jamesd

london21 said:

I thought there is the lifetime allowance of £1,073,100. I thought this was not taxable? 

Up to that level there is 25% tax free sum and 75% taxable.

Above that level there is no 25% tax free sum and there is in addition a lifetime allowance charge of 25% if to be taken as taxable income or 55% if to be taken as a lump sum without further income tax.