Your thoughts and advice on my financial situation

cloud_dog

Are you paid under a Salary Sacrifice arrangement?

If you are then that leans the discussion towards putting more into your workplace scheme.

As a BRT payer a LISA is more efficient than pensions under a net pay or relief at source arrangement, so it may make snese to maximise the LISA (S&S of course).

Altior

With 170K+ cash, pension access is not really a significant consideration. 

But at age 40, there is plenty of time to rotate some of this into a pension anyway. 

My 2p worth, the key question here is when the OP is planning to retire. Assuming they will be getting full state pension, the most benefit to be derived from a pension fund will be drawing from it when it is taxable, with no other income (so the assumed 10 years before state pension kicks in). Keeping the TFLS for when the state pension kicks in (potential to defer SP when the time comes).

allegro120

simonsmithsays said:

Paying off the mortgage at a similar time to you was the key thing for us.

Then we ramped up pension contributions and savings

Paying off my mortgage early was the best financial decision I've ever made. I was on modest salary and it took me many years to save up for this goal, but it was a peace of mind when it was achieved.

When I was in my mid 30's I was offered to double my pension contribution and I decided against it.  This was the worst financial decision I've ever made.

VNX

cloud_dog said:

Are you paid under a Salary Sacrifice arrangement?

If you are then that leans the discussion towards putting more into your workplace scheme.

As a BRT payer a LISA is more efficient than pensions under a net pay or relief at source arrangement, so it may make snese to maximise the LISA (S&S of course).

Thank you, I looked online but can’t get my head around salary sacrifice, can you put it into laymens terms for me?

VNX

Altior said:

With 170K+ cash, pension access is not really a significant consideration. 

But at age 40, there is plenty of time to rotate some of this into a pension anyway. 

My 2p worth, the key question here is when the OP is planning to retire. Assuming they will be getting full state pension, the most benefit to be derived from a pension fund will be drawing from it when it is taxable, with no other income (so the assumed 10 years before state pension kicks in). Keeping the TFLS for when the state pension kicks in (potential to defer SP when the time comes).

Sorry but what does TFLS mean?

eskbanker

VNX said:

cloud_dog said:

Are you paid under a Salary Sacrifice arrangement?

If you are then that leans the discussion towards putting more into your workplace scheme.

As a BRT payer a LISA is more efficient than pensions under a net pay or relief at source arrangement, so it may make snese to maximise the LISA (S&S of course).

Thank you, I looked online but can’t get my head around salary sacrifice, can you put it into laymens terms for me?

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/salary-sacrifice-and-your-pension

VNX said:

Altior said:

With 170K+ cash, pension access is not really a significant consideration. 

But at age 40, there is plenty of time to rotate some of this into a pension anyway. 

My 2p worth, the key question here is when the OP is planning to retire. Assuming they will be getting full state pension, the most benefit to be derived from a pension fund will be drawing from it when it is taxable, with no other income (so the assumed 10 years before state pension kicks in). Keeping the TFLS for when the state pension kicks in (potential to defer SP when the time comes).

Sorry but what does TFLS mean?

Tax-Free Lump Sum.

VNX

cloud_dog said:

Are you paid under a Salary Sacrifice arrangement?

If you are then that leans the discussion towards putting more into your workplace scheme.

As a BRT payer a LISA is more efficient than pensions under a net pay or relief at source arrangement, so it may make snese to maximise the LISA (S&S of course).

I don’t know but I can increase my pension contributions to whatever I want so would this be SS

Albermarle

Altior said:

With 170K+ cash, pension access is not really a significant consideration. 

But at age 40, there is plenty of time to rotate some of this into a pension anyway. 

My 2p worth, the key question here is when the OP is planning to retire. Assuming they will be getting full state pension, the most benefit to be derived from a pension fund will be drawing from it when it is taxable, with no other income (so the assumed 10 years before state pension kicks in). Keeping the TFLS for when the state pension kicks in (potential to defer SP when the time comes).

You can not take taxable income without taking at least some of the TFLS as well/first.
If you want to take £12570 in taxable income, then you have to take at least £4190 of tax free cash as well.
You can not just save up all the TFLS for later.

Altior

Albermarle said:

Altior said:

With 170K+ cash, pension access is not really a significant consideration. 

But at age 40, there is plenty of time to rotate some of this into a pension anyway. 

My 2p worth, the key question here is when the OP is planning to retire. Assuming they will be getting full state pension, the most benefit to be derived from a pension fund will be drawing from it when it is taxable, with no other income (so the assumed 10 years before state pension kicks in). Keeping the TFLS for when the state pension kicks in (potential to defer SP when the time comes).

You can not take taxable income without taking at least some of the TFLS as well/first.
If you want to take £12570 in taxable income, then you have to take at least £4190 of tax free cash as well.
You can not just save up all the TFLS for later.

An uncrystallised funds pension lump sum (UFPLS) is an authorised lump sum payment made from uncrystallised money purchase funds – there is a 25% tax-free element with the balance taxed at the member’s marginal rate of income tax.

Yes, in today's legislation I'm suggesting they would crystallise 16760. 16760 * .75  = 12570, all 0% income tax. 2880 can be put back into a pension, it's bumped back up to 3600. Leaving a modest 1310 to be put into an ISA. *10 years that's 167600 extracted from the DC pension pot tax at effective zero tax (+7200 back from the taxpayer). That's what I'm planning anyway (will need other sources of funds to potentially lean on, ISAs, PBs etc). 

Of course the rules are highly unlikely to be the same in 10/20/30 years. But we can only make judgements on what we do know at the time. If people are 20% marginal payers when contributing into, and taking pension income then the benefit is quite marginal, circa 6% (SalSac excepted).  

Ocelot

sheslookinhot said:

Pension every time.

I don't know. My work pension seems to lose around £300 a week, no matter how the stock market is doing. Effectively all my contributions are disappearing into the ether.