When to reduce pension contributions?

Cobbler_tone

The usual mentions about 40% tax. You cannot be 'wealthy' without paying some 40% tax by nature of the bands. E.g. if you are earning £100k plus for years and contributing high levels into a pension for years, you need the slot machine to pay out sometime. Lower your contributions and you pay 40% whilst working.
The stealthy tax bands ensure it gets harder each year.

I've had many years paying some 40% tax because I needed the net income, later on I have been able to avoid it and thankfully will retire in the sweet spot.

ORC

Thanks for all your comments - plenty of food for thought.

In many ways it has reinforced my feeling that some additional flexibility would be helpful, but whether that means I can convince myself to pay more tax today is another question!! It's hard to weigh the unquantifiable....

In terms of other points made:

1. I do have a decent emergency fund so I'm not concerned about the foreseeable types of expenses.

2. I am aiming to retire at 55, but my DC is accessible then so I don't need a bridge.

3. The loss of the pension IHT benefit has definitely moved me towards contributing less. Before that, I was clearer that continuing with max contributions was the right thing to do.

Skylla2010

Out of interest, how is it your DC is accessible at 55?

vacheron

Skylla2010 said:

Out of interest, how is it your DC is accessible at 55?

Probably has a PPA (Protected Pension Age) entitlement. 

ORC

Yes, that's right - my DC has a PPA. My wife's DC does too actually. I suspect quite a lot of people will have a PPA but aren't aware of it - best to check.

Skylla2010

Excellent!

vacheron

ORC said:

Yes, that's right - my DC has a PPA. My wife's DC does too actually. I suspect quite a lot of people will have a PPA but aren't aware of it - best to check.

Very good recent video on the subject and how to check:…

https://youtu.be/756h-kRxEug?si=I2Ig_Dad_aL-o0cK

MEL1981

Very similar position to you here. 43 and similar pension pot.

Had planned to Max out pension until say 48 but still trying to Max out the ISA allowance for both myself and partner to bridge from early 50s. 

Lucky you and your partner have PPA pensions too which if something we don't have.  It's a nice position to be in, but one that takes a bit of thought. 

ORC

MEL1981 said:

Very similar position to you here. 43 and similar pension pot.

Had planned to Max out pension until say 48 but still trying to Max out the ISA allowance for both myself and partner to bridge from early 50s. 

Lucky you and your partner have PPA pensions too which if something we don't have.  It's a nice position to be in, but one that takes a bit of thought. 

How have you decided the right time to stop maxing out the pension? Is it by reference to how much you are aiming for in your pension, or your bridge, or maybe something else?

Bostonerimus1

Flexibility of income sources is underrated. I would keep making DC contributions to get the max employer match and then put as much as you can into an ISA and once that allowance is filled just invest in a regular investment account. This of course assumes you've paid off all your debt.