Salary sacrifice query

Nimb

Before posting my query I just want to say thank you to everyone who has been replying to the posts on this forum. Having recently decided to look at retiring early the info provided here has been extremely helpful. 

Onto my query with my current financial situation as a bit of background

age 52
mortgage paid off ( no other significant debt)
DB pension closed (currently paying approx 10k with 5% RPI max annual increase)
State pension already at full amount
My OH is in a similar financial situation and we have no children
Approx £40k in readily available cash if needed

my aim is to build up my DC pot in order to retire a few years early using this pot (and savings) until the state pension 

I am currently paying 7.5% into a DC pension which my employer matches up to 7.5% and is done via Salary Sacrifice. Now that my mortgage is clear I am looking at using some of my excess cash to up my DC contributions to 15-20%. 

If I increase my DC contributions I will be be removed from Salary Sacrifice due to falling below the minimum wage threshold. I was just wanting to know if increasing my contributions is still my best option or is there a more tax efficient way to invest this excess cash that would still help me achieve my goals

MX5huggy

If increasing your work place contributions will stop the salary sacrifice on all contributions don’t do this, the SS is worth 13.25% NI saving to you. 

Open a SIPP and make contributions to this, the SIPP provider will get 25% from the government and add it to your account (this is the equivalent at the 20% tax you paid on the income, except they do it even if you did pay tax on the income as it’s below the tax allowance).

Albermarle

As above, open a new separate pension for the extra contributions. It is very easy to do on line.

pensionpawn

Is your wife's pension also receiving the maximum SS contributions? With two personal allowances available making significant contributions to your wife's pension / SIPP in order to boost / secure her pot so that it is large enough to allow her to draw down (at least) her PA each year is a good strategy? Also, what about using any spare cash to minimise outgoings? For example, solar panels and a battery (if you can find them!) will ease the burden of energy bills for quite a few years to come. If your mileage is high what about an EV? New gas boiler to improve efficiency? Although not directly pension strategies they are outgoings reduction strategies that have an immediate postive impact on your net retirement income.

Troxy

As above, best not to breach NMW and lose the NI saving.
You probably can pay personal one off contributions to your work pension. This can save on administration and work pensions usually have low charges

Nimb

pensionpawn said:

Is your wife's pension also receiving the maximum SS contributions? With two personal allowances available making significant contributions to your wife's pension / SIPP in order to boost / secure her pot so that it is large enough to allow her to draw down (at least) her PA each year is a good strategy? Also, what about using any spare cash to minimise outgoings? For example, solar panels and a battery (if you can find them!) will ease the burden of energy bills for quite a few years to come. If your mileage is high what about an EV? New gas boiler to improve efficiency? Although not directly pension strategies they are outgoings reduction strategies that have an immediate postive impact on your net retirement income.

Some nice steers on thinking outside of the pension bubble - have recently updated the boiler (old one lasted 29 years). Looked at solar  panels a while back but thought  return on investment was too long as there are only 2 of us so costs are (relatively) low. EV is possibility for next car but we both hold cars for years until reliability becomes an issue. 

My OH has also maxed out get SS so can’t give her any help on that front

thanks to everyone giving me a nudge in the right direction - off to the SIPP forum now to do a bit of research

Albermarle

You probably can pay personal one off contributions to your work pension. This can save on administration and work pensions usually have low charges

OP - As above also include the possibility of lump sums into your workplace pensions. Two points to consider:

Their charges - often the employer has negotiated a good discount, but not always.

You will need to check with them that it would be OK . As your salsac pension effectively only has employer contributions and no tax relief added, then you want to be sure that any lump sum payments from you are treated differently and tax relief is added. For sure it is possible ( I have done it) but worth checking in advance.