Increase pension contributions and live off salary and savings.

ali_bear

👍️ what Albermarle said 👆️

Ozzig

https://forums.moneysavingexpert.com/discussion/comment/81935209#Comment_81935209

Unfortunately, the pot won't get close to a million pounds :(

I'm not expecting to become a 40% tax payer in retirement.

Not had the chance to get the spreadsheet done, flipping work getting in the way :)

The potential overtime is playing on my mind.

Instead of 24% across the whole year, would front-loading the first 6 months at something higher, possibly 33%, and gradually reigning it back up 24% over the remaining 6 months if no overtime occurred be a good idea?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81935340#Comment_81935340

Yes you could do that if your employer was happy to do changes at your request. Some employers will only allow changes say twice a year for example, to save on admin.

Ozzig

https://forums.moneysavingexpert.com/discussion/comment/81935710#Comment_81935710

As far as I can tell, the system we use to make the change allows one per month.

Which is why I'm thinking of front-loading to try and mitigate any overtime, then possibly correcting as the year progresses.

Triumph13

If the system lets you change every month, then you can really have fun. Rather than sacrifice a level amount every month, do a mixture of some months where you only contribute enough to get the maximum employer contribution, and others where you o all the way down to minimum wage. That way you end up paying less NI :)

Of course, that kind of thing is part of why they are soon changing the rules to severely restrict salary sacrifice. When that happens - of if you can't change as often after all - then your answer is to open a private pension or SIPP. It misses the NI savings, but it allows you to bung in a last minute contribution if you do more OT than expected.

kempiejon

Like a few others I ramped up pensions to the maximum of my relevant earnings into pensions, some via the work scheme. If one can afford it from other sources and there's no problem accessing the money - i.e. in the couple of years before 55/7, then drop down to min wage at work and bung the balance in a SIPP getting all your tax back and a bit extra from the personal allowance. That tax leverage was a very useful part of my plan. I can also contrive to avoid paying tax until state pension age if I choose to.

GunJack

A word of warning....

Altering contributions on a month by month basis can drive you nuts!!!

I've had a situation this year where, down to multiple instances (including back pay, bonus, annual leave selling and HMRC messing with tax codes) that I've had to pay very close attention to pension contributions to stay within the 20% tax bracket. And the more you have to do it, the more you doubt your calculations 🤬

However, final payslip of the year shows I managed to get to £50 under the 40% threshold, but it really felt like hard work 🤣🤣

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/81936274#Comment_81936274

I fell foul last year. The issue I have is that our bonus is paid the last week of March and we are unable to change contributions after we know what it is going to be. We won't entertain full bonus sacrifice and I have asked a couple of times. I went really bold last year and still fell £200 over the 40% bracket and got stung for tax on interest. This year I have been in the fortunate position to be able to contribute almost down to NMW so not an issue, which is just as well as we got a great bonus this year.

HMRC have over taxed me this year though by around £450, no doubt due to my changing contributions. I'll wait a few weeks to tackle it as they were quick to adjust my tax code for 2026/27 for the tax on interest from 2045/25.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81935851#Comment_81935851

Of course, that kind of thing is part of why they are soon changing the rules to severely restrict salary sacrifice. When that happens - of if you can't change as often after all - then your answer is to open a private pension or SIPP. It misses the NI savings, but it allows you to bung in a last minute contribution if you do more OT than expected.

I am not sure about how exactly the new rules will be applied, but I would assume that once you hit the new salary sacrifice limit, you could still contribute more to your workplace pension, just not via salary sacrifice. In which case it would not be necessary to open a new pension ( unless you wanted to of course) .

GunJack

https://forums.moneysavingexpert.com/discussion/comment/81936337#Comment_81936337

I was £100 exactly over in 24/25 which really miffed me, and it was down to my misunderstanding of the marriage allowance extra bit....I hadn't realised that your taxable had to remain in the 20% band WITHOUT the extra marriage allowance so got me sums wrong 🤬