Should I change my pension contributions ahead of the Autumn Budget?

Grumpy_chap

Dazed_and_C0nfused said:

It's not technically a pension change but, for some people, the NI benefit of sacrificing salary into a pension was definitely reduced mid year under the last government.

The latest comment on the BBC suggests that the employer NI will be increased:
https://www.bbc.co.uk/news/articles/c3e9yk24w3eo

That is an easy move to make, seems to meet the manifesto commitment not to increase VAT, NI, or Income Tax for "working people", and can be implemented very swiftly because NI is calculated on the basis of weekly / monthly earning interval rather than annual basis.  (Exception is Director of own Ltd Co.)
Whether the majority will make the link to an increase in employer's NI impacting the total cost to employ (hence how much remains for pay rises) and whether the bleats of a "tax on jobs" will be loud remains to be heard.

What I don't know (because I don't have the insight to the mechanics of the process) is whether applying NI to employer's pension contributions is a straightforward change or would need a longer run-in period.

If NI will increase and / or ne applied to employer pensions, it will make sense for any Director-Owners of Ltd Co to make any pension contributions that were planned anyway before rather than after the budget.

granta

[Deleted User] said:

granta said:

I'm not making any changes pre-Budget either.

But I'm curious to know how feasible it would be to implement any pension tax changes mid- tax year anyway?

Therefore I'm going on the assumption that we would have until April 2025 to make adjustments before anything kicked in! But could be wrong, I don't know if historically there have been changes of this nature that have been implemented immediately.

It's been done before - Google the changes made to pension from December 2009 - special annual allowance charge.

If it was me, I would not change any monthly contributions. If I was planning to make a material one off contribution before the end of the tax year, and could afford it, I would do it before the Budget.

Thanks. Yes I've been thinking about adding a small booster payment to my SIPP so will aim to do it before 30 October. I am a basic rate tax payer so am still working to an assumption that I might be less impacted, but all wild guesses really!

Grumpy_chap

[Deleted User] said:

It can be done very easily. Create new class of employer-only NIC and charge it at x% on the aggregate of all employer contributions on or after a particular date. 

Thank you.

It makes the "should I do something different before the budget?" question dependent upon circumstances.

I was already decided that I would make additional contributions that I planned to make anyway and get them done before the budget.  That is as Owner-Director Ltd Co.
My residual concern is whether there'll be a change affecting the management of funds within pension and / or to the TFLS / tax free drawdown rules but I suspect any such changes will be difficult to implement swiftly.  (Politically difficult even if not technically difficult.)

My wife, on the other hand, can only make the non-working £2,880 (£3.6k) contribution and will simply wait.  The only rumour that might affect her (but seems to have reduced in mention lately) is the possibility of flat rate relief on contributions which would possibly benefit her, so worth waiting just in case.  I am not hopeful as giving non-working individuals increased relief on pension contributions will not help to reduce any budget deficit.

JoeCrystal

Grumpy_chap said:

Dazed_and_C0nfused said:

It's not technically a pension change but, for some people, the NI benefit of sacrificing salary into a pension was definitely reduced mid year under the last government.

The latest comment on the BBC suggests that the employer NI will be increased:
https://www.bbc.co.uk/news/articles/c3e9yk24w3eo

Well, BBC reported that the PM did not rule out raising the employer NI contributions today. So more likely than not!

ali_bear

Seems likely she will be closing the loopholes that currently allow widespread NI and IHT avoidance. But the changes won't come in overnight. 

TheBanker

Grumpy_chap said:

[Deleted User] said:

It can be done very easily. Create new class of employer-only NIC and charge it at x% on the aggregate of all employer contributions on or after a particular date. 

Thank you.

It makes the "should I do something different before the budget?" question dependent upon circumstances.

I was already decided that I would make additional contributions that I planned to make anyway and get them done before the budget.  That is as Owner-Director Ltd Co.
My residual concern is whether there'll be a change affecting the management of funds within pension and / or to the TFLS / tax free drawdown rules but I suspect any such changes will be difficult to implement swiftly.  (Politically difficult even if not technically difficult.)

My wife, on the other hand, can only make the non-working £2,880 (£3.6k) contribution and will simply wait.  The only rumour that might affect her (but seems to have reduced in mention lately) is the possibility of flat rate relief on contributions which would possibly benefit her, so worth waiting just in case.  I am not hopeful as giving non-working individuals increased relief on pension contributions will not help to reduce any budget deficit.

In the short term you're right. In the longer term, it will help public finances as more private pension provision means fewer people looking to the state for help through Pension Credit. Unfortunatly, this will be a budget for the here and now so I don't think anyone, rich or poor, will be better off after 30 October. 

Qyburn

Dazed_and_C0nfused said:

It's not technically a pension change but, for some people, the NI benefit of sacrificing salary into a pension was definitely reduced mid year under the last government.

Is that a reference to a cut in employee NI? If so I can't see that it actually adversely affected SS contributions, surely for the same amount sacrificed the same amount went into the pension.

MallyGirl

The saving was less in pay packet terms though

vacheron

dllive said:

Hi all,

I know noone has a crystal ball, but curious to hear what others are doing ahead of the Autumn Budget regards pension contributions.

All my SIPP contributions are in passive world index trackers (Vanguard), and Im a HR tax payer. Used up my ISA allowance.

I presume the goverment will do a little fiddling with pensions, but Im not sure obviously.

Ive decided to hedge my bets, and quickly shuffle a load of contributions in before October 30th; and retain the rest of my conrtibutions for after the Autumn budget.

Im just kinda curious to hear what others are doing. 

Thanks

I would imagine any fiddling would be related to contributions on the way in, or taxation on the way out. I'm not doing anything different with my contributions or the funds within my SIPPs. There are far larger elephants in the room which I need to focus on instead. 

Dazed_and_C0nfused said:

It's not technically a pension change but, for some people, the NI benefit of sacrificing salary into a pension was definitely reduced mid year under the last government.

Whch ironically (in pension terms at least) hit the "hard working people" the most as those better off (who were sacrificing exclusively from their higher rate income) were not affected by this "pension reduction" and actually profited from a higher basic rate take home pay. They also and saw no reduction to their 2% NI saving into their pensions as this limit was not reduced.

If the latest mutterings about Labor abolishing Employer Salsac NI savings were true, this would also adversely affect millions of people earning the lowest wages who are trying to provide for their future.

vacheron

granta said:

I'm not making any changes pre-Budget either.

But I'm curious to know how feasible it would be to implement any pension tax changes mid- tax year anyway?

Therefore I'm going on the assumption that we would have until April 2025 to make adjustments before anything kicked in! But could be wrong, I don't know if historically there have been changes of this nature that have been implemented immediately.

I doubt any pension changes could be implemented immediately, or even "quickly" but stamp duty changes could (and probably should) be immediate to prevent a rush to the exits, this can also be sorted out next year retrospectively in people's 2024-25 tax returns. 

This differs from Fred the soon to be pensioner, who has budgeted and planned for years and whose retirement has been costed in anticipation of his 25% lump sum to pay off his mortgage on November 1st!

For this reason I am focusing purely on stamp duty preparation, be I right or wrong.