Questions on Private Pension

tksnota

https://forums.moneysavingexpert.com/discussion/comment/81953746#Comment_81953746

Thanks. Kindly advise if how I can test the system. Is there a YouTube instruction video that I can use or you can tell me the steps that I need to do on the dashboard

tksnota

https://forums.moneysavingexpert.com/discussion/comment/81953706#Comment_81953706

Thanks. I’m really new about this pension so my question if HMRC can recover the tax amount up to the 50% of the income, will HMRC get the tax amount in one financial or can it be longer?

Is the preferred tax recovery will be via salary when working or pension if already retired

tksnota

I also need to raise some questions about the April 2029 changes in salary sacrifice restriction to £2000/year

1. If an employer doubles the employee contribution that resulted in a £6k/year (£4k =employer ; £2k employee), will the employee need to pay the tax on the excess?
2. Is there a scheme of unused allowable pension in a year can be carried out to the next year. E.g this year £1k so next year it can be £3k salary sacrifice contribution without paying any NIC?
3. Other salary sacrifice like car is not affected by the April 2029 legislation. Am I correct?
4. If someone is employed by 2 employers and one of them can provide £2k pension salary sacrifice, is it advisable to discontinue the other employer’s pension contributions because the employee will pay exceeding the £2k

Thanks. tksnota

Marcon

2. No

3. Yes

Clarity awaited on other points

katejo

https://forums.moneysavingexpert.com/discussion/comment/81952737#Comment_81952737

My question is just about your last statement about taking pension while still working. My pension scheme doesn't allow this at all but other schemes (eg. USS) do and I know people who are taking the flexibility option. Are you saying that this isn't a good way to go? Just curious. I have just notified SAUL that I want to start taking mine.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81955586#Comment_81955586

I was not thinking about flexible retirement where you cut your working hours (and pay) by a percentage and take a part of the pension at the same time. I happen to think that taking a gentle glide path into retirement is a good idea. The sudden switch from 5 days a week to 0 days a week is a shock to the system and you need to prepare for it (IMV).

My comment was aimed at working full time and drawing on your pension at the same time.

First you are going to be paying tax on the pension quite likely at a higher rate than if it was your only source of income. It may push you into the higher rate of tax. Or it may be that the pension on its own would be covered by your personal allowance but the salary uses that up.

Second what are you doing with the money? The pension is meant to give you an income when you are not working. It is meant to enable you to STOP working. If you are using it to supplement your working income then you are going to face a big financial shock when you do eventually have to stop work. OK maybe you are not spending it but are saving it in an ISA and just juggling the money between tax protected pots. That is something people do with the TFLS but with a taxable pension? Maybe you do it you have used a spreadsheet to work out what tax rate you will be paying on the pension income in 20 years time? I don't know.

Third you may trigger the MPAA. Depends on the pension and what you are drawing from it. And maybe you are not contributing that much to a pension anyway.

Finally how long will your pension last? For a DC pension you have a pot of money and the sooner you start to draw from it the sooner it is likely to run out. That is not a consideration for a DB pension but there the sooner you start to draw the pension the less it is likely to be per annum.

katejo

https://forums.moneysavingexpert.com/discussion/comment/81956132#Comment_81956132

Ok thanks. Clear now. Mine is DB. I reduced hours without taking any of the pension in advance. My monthly pension income will actually be a bit higher than I have been getting on reduced salary since last summer. I reduced my lump sum offered to get a better monthly income.

tksnota

https://forums.moneysavingexpert.com/discussion/comment/81954051#Comment_81954051

Hi,

Are you asking me for questions’ 1 and 4?

tksnota