Balance between Pension/S&SISA/cash

MX5huggy

Plan 1 is 25 years for post 2006/07 but I guess yours is earlier so it’s when you hit 65. As Plan 1 interest rate is 1.1% currently there’s no point paying it off. 

tebbins

Student loan repayments are on your gross salary, before pension contributions unlike income tax.
Using MSE income tax calculator, with a Plan 1 loan and upping your pension contributions to 26%, would leave you with £2.7k per month take home.

Edit: I did not know salary sacrifice was treated differently, every day's a school day.

noclaf

Thanks Mx5huggy and Tebbins!

Repayment for my sl started in 2004 though HMRC did not take it for a number of years and I had periods of either being unemployed or a contractor where they didn't take anything so my remaining is balance is £10-12K  though I have no plans to increase repayments or do it any quicker.
Re.the 26% sal sac.contribution I will have play with my contribution settings, I've pretty much been varying them month to month this year.

Albermarle

noclaf said:

dunstonh said:

The S&SISA could act as a bridge untill I hit the age where I can begin taking the pension.

Does that suggest you plan to retire earlier than age 58?

As of now I'm not sure that will be possible, am assuming that I will need to work longer to ensure retirement will be financially comfortable etc So I am assuming that I will work till my 60's subject to health and other factors.to be considered. Retiring earlier would be great but I'm trying to be realistic too.

On the other hand if you keep putting significant amounts in your pension , you might find that you will be able to retire early !
There are plenty of early retirees on this forum , although I think that is not so representative and in reality only a small % of people retire much earlier than 58.
It is looking ahead, but usually the issue is having enough money to bridge the gap until the State Pension is paid, and then still having enough on top of the State pension to live the lifestyle you want.
Some recent figures discussed say a couple need nearly £50K a year after tax to have a comfortable retirement, although the opinion on here is that you can have a pretty comfortable retirement on less than that . Some low spenders seem to be quite happy on less than £20K a year, which is only effectively  two state pensions.

noclaf

Thanks Albermarle, you raise valid points. I probably don't need to worry about LTA and potential future taxation changes for now but I guess that has also been playing on my mind though I am clear that not much else currently,  will match the benefits of salary sac for reasons already set out by our fellow forum posters.
 I do also wonder if I need to take some calculated risks in terms of the actual underlying investments for example a slant to EM or Tech for example though wary of keeping costs sensible too.

Albermarle

you raise valid points. I probably don't need to worry about LTA 

If you get to the stage where you are faced with LTA issues then you have 90% won the game , so you should see it more as an achievement than anything .

noclaf

Albermarle said:

you raise valid points. I probably don't need to worry about LTA 

If you get to the stage where you are faced with LTA issues then you have 90% won the game , so you should see it more as an achievement than anything .

It's a distant dream right now but here's hoping!

jimjames

There is the LTA aspect but also the tax situation in retirement to consider too. It's very much crystal ball territory as we have no idea what the rates and bands will be at that stage but it's something that I've realised is worth consideration. Money into a pension is tax beneficial on the way in, money into an ISA is tax beneficial on the way out. So any income from an ISA is completely free of tax regardless of any other income you have which means if you are close to the higher rate tax bands by having some other income from an ISA you could stay under that level. If all income was from a pension you might be over the HR band.

noclaf

JimJames  - For me personally I want to get my total pension pot(s) value into the £200-300k territory as quickly as practically possible and then maybe switch more attention to the non-pension wrappers. I think compounding will be more powerful at those levels.....of course markets go down as well as up but once you have a decent foundation, then even if average annual returns across a 15/20 year period never quite match the bull run we had over the last few years it will still be enough to make a significant difference hopefully. It's unfortunate that I didn't know what I know now regarding the powerful combination of increased contributions and tweaks to the pensions underlying investments as that would of made a huge difference to where I am now but hindsight is always a wonderful concept!

 As you mention we can't predict what may happen with regards taxation and rule changes...I think it's inevitable unfortunately but till then will keep going with the current approach.

noclaf

tebbins said:

Student loan repayments are on your gross salary, before pension contributions unlike income tax.
Using MSE income tax calculator, with a Plan 1 loan and upping your pension contributions to 26%, would leave you with £2.7k per month take home.

Edit: I did not know salary sacrifice was treated differently, every day's a school day.

Hi Tebbins,

So my pay setup is slightly complicated in that my base is actually circa £57,600 and I then receive an allowance on top that takes my standard gross pay(not including bonuses) to just under £63k. The allowance can be used to buy various benefits or taken as cash, I take the vast majority as cash and in fact I will be taking all as cash for next year.
The pension % via salary sacrifice is based on the £57.6k rather than the gross £63k including allowance. That's just how my employer have setup the pension. I also received a pay rise in September.
So as long as my taxable pay come March 2023 payslip is £50,000.00 or less would that mean I would still be eligible(or my wife actually) for full child benefit?
Additionally, would I need to complete a annual self assessment if we claim for child benefit? I've never completed one in my life so thought I'd ask