Paying lump sum into pot

Mick70

Morning

if have £10k that would like to get into wife’s DC pension pot (or s+s isa) , but can’t do so until April .
is it best to pay lump sum in one go early April , Or , drip feed it in at £1k per month ?
apologies if it’s silly question , just I’m aware can throw all your money in at wrong time ?

thanks
mick 

Dazed_and_C0nfused

Providing you are within the tax relief and annual allowance limits there isn't really a wrong time to add money to a pension.

I suspect you are thinking about when to invest it within the pension wrapper?

Malthusian

Mick70 said:

apologies if it’s silly question , just I’m aware can throw all your money in at wrong time ?

Only if you are planning to withdraw the money in the next 5-10 years. Otherwise there is no wrong time. Even at the least good time a diversified long-term investment will beat cash if held for the long term, in the absence of economic apocalypse.

Markets rise more often than they fall, so if you have a lump sum available in April, the expected outcome of drip-feeding it over a year will be a small loss, minus any extra trading costs (if your platform charges them). But you might get lucky.

Albermarle

Or you could hedge your bets and add £5 k in April and £5K 6 months later , if it makes you feel better.

dunstonh

if have £10k that would like to get into wife’s DC pension pot (or s+s isa) , but can’t do so until April .
is it best to pay lump sum in one go early April , Or , drip feed it in at £1k per month ?

You won't know in advance which option is best until you are a couple of years down the road and look back with hindsight.  Statistically though, paying in at the earliest point and not phasing it results in the higher returns in most periods.

Goose_Grass

Certainly the £10K could all go in at once if you are sure you know how you want it invested. 

Or you could put it in over a 2 or 3 month period in the spring.  This could be easier on your nerves.  Also, it allows you to put a proportion in, look at the re-balanced allocations your infusion creates, think about that a little, and stick in the rest. 

No need to wait the whole year to get it in there.  But I sometimes do something, have a slightly better idea a little later, then do something a little different.  It's part of my learning process.

Secret2ndAccount

I would pay in 2880 (grossed up to 3600) in April, then wait until your wife has earned 12.5k before paying in the rest. You can only pay in what you earn in a year. It's okay to pay the money into the pension first, then earn it later, but what if misfortune strikes and she doesn't earn the 12.5k? To answer my own question, you can fill out forms to ask for the pension contrib back, or leave it in, but lose the tax uplift. I tend to make 2 or 3 payments per year, as I know what my earnings will be.

Albermarle

To answer my own question, you can fill out forms to ask for the pension contrib back, or leave it in, but lose the tax uplift.

You can ask for the contribution back, but not sure how many providers would be willing for you to leave it in the pension with no tax relief added. It would be a special case and probably their IT system could not handle it.

Mick70

We’re both in 50s so it hopefully only there for 5-10 year.
Will just pay it on in April I guess 

Mick70

Thanks replies by way