Nearing Retirement .TAX Question

wessex100_2

I am a couple of years from retiring from full time work. Currently receiving my State pension on top of salary. Have about 40k in a company defined pension. They pay 6% I contribute another  12%.  Should i consider only matching the 6% and putting the additional 6% into ISA? Also best way to reduce TAX burden at retirement. Basic tax rate payer.  Thanks in advance. Please keep answers fairly simple. Not a finance expert. 

Dazed_and_C0nfused

wessex100_2 said:

I am a couple of years from retiring from full time work. Currently receiving my State pension on top of salary. Have about 40k in a company defined pension. They pay 6% I contribute another  12%.  Should i consider only matching the 6% and putting the additional 6% into ISA? Also best way to reduce TAX burden at retirement. Basic tax rate payer.  Thanks in advance. Please keep answers fairly simple. Not a finance expert. 

Why would you want to give up the tax benefits of a pension?

If you are a basic rate payer the pension usually beats the ISA by 6.25%.  More depending on the method used to get the money into your pension.

Could you elaborate on why paying less tax is so important to you?

Most people would rather have more money overall.

If you would genuinely prefer to reduce your tax liability then the simplest option is to not apply for Marriage Allowance and top up your State Pension with your personal/company pension to £12,570.  Zero tax liability 😀

Hoenir

Never let the dog wag the tail

Albermarle

wessex100_2 said:

I am a couple of years from retiring from full time work. Currently receiving my State pension on top of salary. Have about 40k in a company defined pension. They pay 6% I contribute another  12%.  Should i consider only matching the 6% and putting the additional 6% into ISA? Also best way to reduce TAX burden at retirement. Basic tax rate payer.  Thanks in advance. Please keep answers fairly simple. Not a finance expert. 

With a pension pot of only £40K, I would very much consider ramping up my pension contribution by as much as I could possibly afford for the next two years.
Unless of your course you will have other sources of income in retirement.

wessex100_2

Dazed_and_C0nfused said:

wessex100_2 said:

I am a couple of years from retiring from full time work. Currently receiving my State pension on top of salary. Have about 40k in a company defined pension. They pay 6% I contribute another  12%.  Should i consider only matching the 6% and putting the additional 6% into ISA? Also best way to reduce TAX burden at retirement. Basic tax rate payer.  Thanks in advance. Please keep answers fairly simple. Not a finance expert. 

Why would you want to give up the tax benefits of a pension?

If you are a basic rate payer the pension usually beats the ISA by 6.25%.  More depending on the method used to get the money into your pension.

Could you elaborate on why paying less tax is so important to you?

Most people would rather have more money overall.

If you would genuinely prefer to reduce your tax liability then the simplest option is to not apply for Marriage Allowance and top up your State Pension with your personal/company pension to £12,570.  Zero tax liability 😀

I guess I'm simply trying to establish the best way to reduce the liability on the 75% taxable lump when I do retire. Seeing if there is anything I can do in advance. 

I do have income from some small annuities from other pensions too. Plus a rental property.

Ref. ISA v Pension growth. You have answered the question clearly.
Thank you

sheramber

Without details of your total income no one knows what tax liability you will have.

Are you taking the 75% as a lump sum or splitting it over more than one year?

eskbanker

Hoenir said:

Never let the dog wag the tail

Why not?  It's supposed to work that way round....