Buying extra pension?

JuliaMary_2

Hello. My pension knowledge is minimal
so any advice much appreciated.
My salary has just tipped over the 40% tax threshold - is it worth using that extra amount (within 40% tax threshold) to buy extra pension and avoid paying higher rate tax etc?
For context - I work in government, am 55 and have split pension: part I can take at 60; part is tied to current state pension age (67) which I can take early but lose 5% for each year I take early,
If I took it all at 60 (with 35% loss) I'd get just over £20K (worked part-time/different jobs when children young so only really started accruing a lot in last few years). 
Have paid mortgage and children now in Uni
so no dependents at the moment. Would like to be comfortable as possible in retirement.
Am in good health at moment so not sure whether to retire at 60, 67 or partially retire at 60-67.
Have full state pension due at 67 - all NI subs paid. Am married and husband has similar amount due in pension (private and state).
Thanks 

r6mile

Firstly, are you sure you will be paying 40% tax? I only mention because say even if you were on 52k “gross” salary, you’d be paying around 3k in Alpha contributions (which benefit from tax relief) so not actually paying Higher Rate tax yet.

But yes, especially if it avoids you paying Higher Rate tax then adding to your pension is always a good idea. Lots of threads in the different ways to add pension in the civil service, including below:

https://forums.moneysavingexpert.com/discussion/6474336/help-boosting-pension#latest

As both you and your husband have a very good level of defined benefit pension coverage already (including SP), my suggestion would be the Civil Service Additional Voluntary Contribution Scheme, which will give you the flexibility of a defined contribution pot and you could for example use to supplement your income if you decide to retire before 67 and your Alpha plus SP come in. Another option might be buying EPA - which allows you to take your Alpha portion by up to 3 years early without penalty.

Lots of options and it all depends on your goals. 

Dazed_and_C0nfused

My salary has just tipped over the 40% tax threshold - is it worth using that extra amount (within 40% tax threshold)

Agree with @r6mile, if that is correct it's unlikely you are actually paying any higher rate tax.

Also, have you checked your State Pension forecast and read the full detail?  It's entirely possible that someone with lots of DB pension years won't get have reached the standard new State Pension of £203.85.  Although with some additional years to come you almost certainly will reach it.  Just maybe not yet. 

german_keeper

Assuming this is Alpha the Actuarial Reduction factor at age 60 is 0.687 so about 31% not 35%. Also as far as I know the factors are due to be revised and the reduction will be lower than that. 

Albermarle

Having £20K + in guaranteed DB pensions each, and then two full state pensions puts you in a very good and safe position.
So whether you should retire early partly depends on your family expenditure. If not already done so you should try and work out what your annual spend  is. You can split it into 
Essentials - Food, bills, cost of running one car etc 
One offs - An average yearly figure to cover things like new boiler ( or heat pump ), major house maintenance, carpet replacement , new car every X number of years etc
'Luxuries' - Like holidays, gifts to family, eating out  etc 

If you have significant cash savings ( you do not mention this) then this could be used to cover the 'one offs' 

It will just give you a better idea of when you can afford to retire. It does not have to be down to the last Pound, unless you are a 'details person' .