Ftse Relagation-Abrdn 29 August 2022 at 8:37AM in ISAs & tax-free savings 39 replies 532 views

Qyburn

My understanding is the employer is only required to contribute 3%, not necessarily to match what the employee puts in.

Qyburn

But I think my other point is valid is it not?  If you contribute to a pension, and don't get tax relief, you will still be taxed when you take money from the pension.  If that's correct it doesn't make a lot of sense compared to paying into any other sort of savings where at worst you'd be taxed on growth or interest but not on the withdrawal itself.

eskbanker

Qyburn said:

My understanding is the employer is only required to contribute 3%, not necessarily to match what the employee puts in.

That's correct, yes, hence me asking if OP is already contributing enough to get the maximum that their employer will pay in, which could indeed be 3%.

Qyburn said:

But I think my other point is valid is it not?  If you contribute to a pension, and don't get tax relief, you will still be taxed when you take money from the pension.  If that's correct it doesn't make a lot of sense compared to paying into any other sort of savings where at worst you'd be taxed on growth or interest but not on the withdrawal itself.

Isn't that a hypothetical point though, in that we don't know what tax relief OP's pension gets?

Dandytf

Qyburn said:

My understanding is the employer is only required to contribute 3%, not necessarily to match what the employee puts in.

Thanks considering I work 20 hour week, I suspect 3% Employee Conts are happening.
No disrespect to employers or Peoples Pension, though Sipp I feel more inclined to make my Personal Conts to.
I have considered using my own Natwest General Investment savings, and placing a sum from that into Sipp, I only wonder If I have enough years to see any gains, or if it's silly using Gia potential returns.

masonic

Qyburn said:

But I think my other point is valid is it not?  If you contribute to a pension, and don't get tax relief, you will still be taxed when you take money from the pension.  If that's correct it doesn't make a lot of sense compared to paying into any other sort of savings where at worst you'd be taxed on growth or interest but not on the withdrawal itself.

You won't necessarily be taxed when you take money out. You can take 25% out tax free, and after that it depends on your income and how much you are taking out. As you can access a private pension 10 years before you reach state pension age, it may be possible to extract quite a lot of it tax free depending on your circumstances.

It is an odd set of circumstances that would leave one unable to get tax relief on pension contributions, but be in a position to save into a pension. Suggests someone is either financially independent and choosing not to work, financially dependent on someone else, or they are facing long term unemployment not of their own choice and retirement savings held outside of pensions would be at risk before qualifying for means tested benefits.

Dandytf

@eskbanker

There is option to make Personal Conts over 3%, to be clear these would Not be matched by Employers.
Though I have never thought in any detail, I guess Max Employers is in effect 3% so I have reached them without doing anything.

grumiofoundation

Dandytf said:

Qyburn said:

My understanding is the employer is only required to contribute 3%, not necessarily to match what the employee puts in.

Thanks considering I work 20 hour week, I suspect 3% Employee Conts are happening.
No disrespect to employers or Peoples Pension, though Sipp I feel more inclined to make my Personal Conts to.
I have considered using my own Natwest General Investment savings, and placing a sum from that into Sipp, I only wonder If I have enough years to see any gains, or if it's silly using Gia potential returns.

Might be worth actually confirming?

Not sure what the second part of your post means. 

The returns you get in ISA/GIA/pension are determined by the investment not the fact they are ISA/GIA/pension.

So if you move from GIA investing in fund A to pension investing in fund A the returns will be the same (because it is the same fund).


As well as checking what your employer is paying into your pension worth checking the tax relief you get on pension contributions (see earlier posts).

Dandytf

@grumiofoundation

Both HL Isa and Natwest GIA are non Pension investment
If I were to move sums from either to SIPP,, then that would mean that each fund value wouldn't grow any further, unless this is wrong.

masonic

Dandytf said:

@grumiofoundation

Both HL Isa and Natwest GIA are non Pension investment
If I were to move sums from either to SIPP,, then that would mean that each fund value wouldn't grow any further, unless this is wrong.

If you sell a fund in your GIA or ISA, pay the money into your SIPP, then buy the same investment, the only growth you'll miss out on are the few days between selling and re-buying. But it would close the door to you being able to access that money until 57+.

Qyburn

eskbanker said:

Isn't that a hypothetical point though, in that we don't know what tax relief OP's pension gets?

Earlier he said he isn't paying tax. Although admittedly his explanations are sometimes hard to follow.