Advice on pensions

Eaglebash

Hi there

Really wanted to ask for some pension advice. 

I am 51 years of age and mortgage free which is an amazing position to be in. 

However, due to circumstances over the years, I haven’t had a personal pension. 

I currently have £25k in a work place and £3k from an employee pension scheme from years ago. 

Want advice on salary sacrifice, putting lump sum into a pension and any other help and assistance anyone can offer. 

Thanks

xylophone

You are currently employed and a member of a workplace scheme?

If you wish to increase your pension provision, presumably you can choose to make additional contributions to this scheme?

Which scheme is it? Which method of tax relief is used (relief at source/net pay)?

https://www.litrg.org.uk/tax-guides/tax-basics/do-i-have-join-pension-scheme/do-you-know-how-tax-relief-your-pension

With regard to salary sacrifice, this is a matter for your employer.

https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye#:~:text=A salary sacrifice arrangement is,of your employee's employment contract.

£3k from an employee pension scheme from years ago. 

What exactly do you mean by this? For example, do you mean that you are a deferred member of a DB pension scheme and can expect an annual pension of this amount when you reach scheme retirement age?

Or do you mean that this is an amount shown on a statement on leaving the scheme?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

gm0

For DC pension saving

The main limitation you face for saving a bigger pension now - assuming your circumstances are more favourable is the annual allowance

This is 40,000 for the total of employer and your employee contributions per year.  You can only make contributions above 2880 if you have "pensionable income" to do it from - employment income. 

Not investment income.  Not savings income.  Not savings.  Not inheritances.

40k becomes 4k if you take income from a pension which you can't yet do until you reach minimum age anyway.

40k shrinks if your income and income tax band goes high enough


So what you can do is mostly determined by what you now earn and will earn until retirement.

Self employment / variable income rules are a bit different and there is a bit of multi-year flexibility to allow for varying revenues and therefore income.

Sal sac is an employer conversation about whether they offer it and on what terms.  Whether that makes sense will vary with your income, desired contribution level, job plans, any other benefits tied to salary level etc.

Albermarle

Want advice on salary sacrifice, putting lump sum into a pension and any other help and assistance anyone can offer. 
Can you give more detail, like your salary level and if your employer currently operates salary sacrifice or not. Also how big is the lump sum you are thinking of ?

Eaglebash

Hi there

£80k basic

Yes, I believe the company offers salary sacrifice. 

£20-£30k lumps sum. 

Any advice would be really useful. 

Many thanks

El_Torro

If you want to put more in your pension (good move) and your employer uses salary sacrifice then the most tax efficient thing to do is to increase the amount your employer is paying into your pension every month. You will need to ask your employer to do this. 

I don't know how much spare cash you have every year / month but sacrificing any amount in the 40% tax band is good. How much you can afford to put in your pension is up to you to decide.

If you want to put a lump sum in there rather than increasing your monthly pension contributions you can do this too. You will need to check how to do this with your pension provider (not your employer). The benefit of salary sacrifice is that you don't pay National Insurance, so sacrificing every month instead of putting in a lump sum will save you 2% NI.