Continue contributing to pension or something else?

noitsnotme

My combined DC pensions have recently exceeded £1m. I have 5 years left before I can start drawdown. My wife and I run a small limited company (no employees, just us) and make employer contributions monthly to both our pensions as well as a lump sum towards the company year end. My wifes DC pension is currently at around £250k.

My understanding (could be wrong!) is that with growth alone, I'm very likely to exceed the current LSA and LSDBA figures. I'm trying to figure out what is best moving forward…

1. Continue contributing to my pension and accept that I may run out of tax free cash withdrawal at some point in the future.
2. Stop contributing to my pension and double contributions to my wifes pension (this would still be under the £60k annual allowance).
3. Something else I haven't thought of.

Option 2 seems sensible however my higher risk profile has meant my pension from our limited company has grown better than the wifes (same contributions over the same time frame - mine is currently valued approx 5% higher). My extra pension is from previous employment and has had no contributions for many years.

Any advice welcome, particularly anything for point number 3 above.

dunstonh

has your wife fully used the annual allowance for this and the last 3 years?

Is your wife a shareholding director?

Brie

Have you paid off all your debts? Mortgage(s) included?

noitsnotme

https://forums.moneysavingexpert.com/discussion/comment/81891443#Comment_81891443

Not fully used AA for last 3 years.

Yes, is a shareholding director (50/50).

Albermarle

Option 2 seems sensible however my higher risk profile has meant my pension from our limited company has grown better than the wifes (same contributions over the same time frame - mine is currently valued approx 5% higher).

There will be nothing to stop her changing the investments in her pension to change its risk profile.

On the other hand if markets were to crash, you might find her current profile survives better than yours.

In reality though a 5% difference over a few years is only a small amount, so they are probably not much different.

noitsnotme

https://forums.moneysavingexpert.com/discussion/comment/81891454#Comment_81891454

House fully paid off. One rental property fully paid off. Another rental property has a small interest only mortgage. Small amount on 0% credit cards (effectively stoozing) more than enough in savings to pay these off.

noitsnotme

https://forums.moneysavingexpert.com/discussion/comment/81891477#Comment_81891477

The pensions are currently managed by an IFA and I’ve never wanted to influence her answers to the risk questionnaire. I may self manage in the future but happy with the IFA doing so for now. I agree her pension would likely fare better (less worse) in a downturn.

Brie

https://forums.moneysavingexpert.com/discussion/comment/81891478#Comment_81891478

what's keeping you from paying off the interest only mortgage? I always thought they were rather expensive but there might be a good business reason for keeping this (I'm not into rental property myself)

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81891489#Comment_81891489

OK so presumably you have asked the same questions to your IFA, about future pension contributions.

What was their opinion ?

noitsnotme

https://forums.moneysavingexpert.com/discussion/comment/81891534#Comment_81891534

Nothing really stopping me paying it off but no real need to at the moment as I’m probably slightly better off leaving the money invested rather than clearing it.

noitsnotme

https://forums.moneysavingexpert.com/discussion/comment/81891551#Comment_81891551

I haven’t yet but have a meeting scheduled in a couple of weeks. The whole LTA/LSA subject rather stupidly fell off my radar until just recently so hadn’t thought to ask before. I wanted to do my own research before the meeting.