When to reduce pension contributions?

HedgehogRulez

Similarly, myself and wife are 46 and im pondering this. My salary is £90k and have a DC pot of £850k, she is a headteacher on a salary of £72k and in TPS.

Outside pensions we have £250k in S&S ISAs and i'm wondering when to start paying 40% tax rather than chucking it all into pensions. Aiming to retire at 55, but considering selling our home and trading up from a £350k to £750k property. This will mean moving from current mortgage of £50k to £450k of course which will need funding.

It's the fiscal drag that is galling!

ORC

HedgehogRulez said:

Similarly, myself and wife are 46 and im pondering this. My salary is £90k and have a DC pot of £850k, she is a headteacher on a salary of £72k and in TPS.

Outside pensions we have £250k in S&S ISAs and i'm wondering when to start paying 40% tax rather than chucking it all into pensions. Aiming to retire at 55, but considering selling our home and trading up from a £350k to £750k property. This will mean moving from current mortgage of £50k to £450k of course which will need funding.

It's the fiscal drag that is galling!

Your position is definitely more complicated to plan with a potential house move and teachers pension in the mix! Though I suppose if you decide to move house then your other decisions probably get easier.

We have also toyed with the idea of moving house, but our current house is big enough and in a good area so we've decided the cost outweighs the benefit. 

BobR64

ali_bear said:

Any more money paid into that DC fund would end up getting taxed at 40% so there is very little to be gained from locking that money away until retirement. 

I think this assumes that you are contributing from income that would otherwise be taxed at 40%. If someone is contributing from income above 100k, I think it probably still makes sense to continue with the pension as you probably aren't going to get into tax bands above 40% on withdrawal.

ORC

BobR64 said:

ali_bear said:

Any more money paid into that DC fund would end up getting taxed at 40% so there is very little to be gained from locking that money away until retirement. 

I think this assumes that you are contributing from income that would otherwise be taxed at 40%. If someone is contributing from income above 100k, I think it probably still makes sense to continue with the pension as you probably aren't going to get into tax bands above 40% on withdrawal.

Yes, that's right - that's the situation I'm in (currently taxed in excess of 40%)

ali_bear

True! 

You poor soul. Aim for 2.5m at 55?