Partially retired civil servant paying higher tax rate

Sootyandspark

Dazed_and_C0nfused 

Your existing pension will be a defined benefit one, think of it as deferred salary, it isn't like a bank account where you can use it as you please.  

There is nothing you have posted which suggests building up a defined contribution pension (pot of money, not deferred salary) isn't possible.

But is that what you actually want to achieve or would you prefer to have more deferred salary type pension?  

Or a maybe you would prefer a mix of both?

If I’m brutally honest, I’m looking at some way of reducing my tax liability and investing that money in some sort of a pension pot (Alpha or via AVC). But that could only be worth it if it’s ’relief at source’ which according to another member, CS salary isn’t. 

I’m 55 and I took the full 25% lump sum and therefore have no debts / mortgage to pay. I am single therefore have to make the right choices for when I have nothing but my pension to rely on. 

Dazed_and_C0nfused

Sootyandspark said:

Dazed_and_C0nfused 

Your existing pension will be a defined benefit one, think of it as deferred salary, it isn't like a bank account where you can use it as you please.  

There is nothing you have posted which suggests building up a defined contribution pension (pot of money, not deferred salary) isn't possible.

But is that what you actually want to achieve or would you prefer to have more deferred salary type pension?  

Or a maybe you would prefer a mix of both?

If I’m brutally honest, I’m looking at some way of reducing my tax liability and investing that money in some sort of a pension pot (Alpha or via AVC). But that could only be worth it if it’s ’relief at source’ which according to another member, CS salary isn’t. 

I’m 55 and I took the full 25% lump sum and therefore have no debts / mortgage to pay. I am single therefore have to make the right choices for when I have nothing but my pension to rely on. 

No idea how you have come to that conclusion 🤔 

There are three main methods of getting money into a pension, net pay (which Alpha uses), relief at source (you pay a net amount and basic rate tax relief is added within the pension) and salary sacrifice (where you don't contribute, you agree to a reduced salary in return for additional employer contributions).

Ultimately you will almost certainly get the extract same tax benefit from each one (salary sacrifice avoids NI as well but I suspect it won't be an option for you), it's just they work in different ways and relief at source, which does not in any way reduce your taxable income, is a bit more work for you as you have to involve HMRC (to claim any higher rate relief due).

I really think you would be far better off deciding which type of extra pension you want first, extra Alpha (DB) pension or a arguably more flexible DC pot?  Remember the DC pot has no guarantees, ultimately it's only as good as your investment choices within the pension.  

At the start of this thread you wanted to reduce your taxable income (which would be achieved using net pay i.e. Alpha (or AVC?) and now you think only relief at source (a personal pension/SIPP) is worth doing.  But they both result in the same outcome tax wise.

Sootyandspark

@Dazed_and_C0nfused - apologies, that’s me mixing up the terminologies. I will read through the responses and try to get a better understanding of what is being suggested.  

Thanks for responding and sorry for my lack of understanding as it seems quite a minefield and I’m not a financial person at all 😊

ClashCityRocker1

Sootyandspark said:

Dazed_and_C0nfused 

Your existing pension will be a defined benefit one, think of it as deferred salary, it isn't like a bank account where you can use it as you please.  

There is nothing you have posted which suggests building up a defined contribution pension (pot of money, not deferred salary) isn't possible.

But is that what you actually want to achieve or would you prefer to have more deferred salary type pension?  

Or a maybe you would prefer a mix of both?

If I’m brutally honest, I’m looking at some way of reducing my tax liability and investing that money in some sort of a pension pot (Alpha or via AVC). But that could only be worth it if it’s ’relief at source’ which according to another member, CS salary isn’t. 

I’m 55 and I took the full 25% lump sum and therefore have no debts / mortgage to pay. I am single therefore have to make the right choices for when I have nothing but my pension to rely on. 

I'd put the money into CS AVC (which is L&G) but then, that's me.

Isthisforreal99

I'm questioning the rationale of actually taking the pension at 55 both actuarilly reduced and paying 40% tax on it when you apparently had no need for the pension right now?

Is any of your pension abated?

Yorkie1

ClashCityRocker1 said:

Sootyandspark said:

Dazed_and_C0nfused 

Your existing pension will be a defined benefit one, think of it as deferred salary, it isn't like a bank account where you can use it as you please.  

There is nothing you have posted which suggests building up a defined contribution pension (pot of money, not deferred salary) isn't possible.

But is that what you actually want to achieve or would you prefer to have more deferred salary type pension?  

Or a maybe you would prefer a mix of both?

If I’m brutally honest, I’m looking at some way of reducing my tax liability and investing that money in some sort of a pension pot (Alpha or via AVC). But that could only be worth it if it’s ’relief at source’ which according to another member, CS salary isn’t. 

I’m 55 and I took the full 25% lump sum and therefore have no debts / mortgage to pay. I am single therefore have to make the right choices for when I have nothing but my pension to rely on. 

I'd put the money into CS AVC (which is L&G) but then, that's me.

That's what I've done in order to get below the HR tax band. (Was already paying for Early Pension too).

ClashCityRocker1

Yorkie1 said:

ClashCityRocker1 said:

Sootyandspark said:

Dazed_and_C0nfused 

I'd put the money into CS AVC (which is L&G) but then, that's me.

That's what I've done in order to get below the HR tax band. (Was already paying for Early Pension too).

Yes - provided you can live in somewhere between £3K and 3.5K a month (with some TFC available in the future if you need it) seems a bit of a simple solution. The annual allowance limits you from escaping if you are a huge earner though, but then it probably wouldn't matter what you do!