Actual loss from pay

Okay so after a bit more research I have now figired out I am on what they call a net pay pension and my partner a salary sacrifice pension.

So initially we are planning on putting in what is needed tk get the max company contribution and for mine I would be just getting the basic rate tax relief. So for example my understanding is if I want to contribute £100 then it would actually work out at around £80 out of my net pay.

So then there is my wifes which is for me anyway a bit more complicated in that she is on salary sacrifice, gets a car allowance and also falls into the high tax rate. But again we worked out to put in the minimum to get the max company contribution which brings her below the high tax rate so would save there. Also she would get the 2% NI savings into her pension. So correct me if I am wrong but if she did a salary sacrifice of £100 then with the high tax saving and NI she would be losing a net pay figure of £58. Then Anything she contributed that would have hit basic tax would get the increase of 12% NI savings so a net loss on pay of £68

Hopefully I am right to this point so then I am thinking it would benefit more to put anything extra we have into her pension as like above £100 goes a lot further in her scheme than mine in terms of impact on net pay anyway and then the high tax rate and NI savings. However the high tax rate would end once she was paying in over a certain amount.

Brynsam wrote: »

Sounds about right - well done for battling through to a sensible conclusion!

Thanks and it was a battle and has made me feel like I need to go back to maths class ha.

I am sure there are drawbacks somewhere but at the moment my view is if every £1 is worth more on my wifes pension as opposed to mine then any overpayments above what we need to get the max employer contribution should go towards her contributions rather than mine. The only drawback there is her pension pot would be large as opposed to mine not being and I retire 1st in the plan so would be drawing on my pension 1st for 9 years until she retires.

Saying that we do have other factors such as a mortgage free house and other savings we plan to have by then which could be drawn on if needed.

cloud_dog wrote: »

OP, does your partners additional contributions go in to the main scheme or are they treated separately, i.e. in an AVC account (additional voluntary contributions)?

Accessing the money, and accessing it as tax efficiently as possible, as MallyGirl mentions, is also just as critical.

I am in a similar position to you and your partner insofar as I will have a DB pension (approx £21k), so all other income will be taxable. OH, works part time with a LGPS very small pension plus a SIPP. I am a HRT payer and my company operates SS so it makes very good financial sense to utilise my tax/SS savings for additional contributions.

The complexity then becomes how do we access my pot flexibly and efficiently. I am tied in to only being able to access the company pension at age 65. But, the additional payments are all going in to a separate AVC account and I have obtained confirmation (in writing) that were I to leave the company before my NRA I could transfer out only the AVC pot and leave the main scheme in place until NRA.

The plan at the moment (will be reassessed based on any taxation/circumstance changes etc), would be to 'retire' early, transfer my AVCs to a SIPP and then draw down these monies until my main scheme kicks in. This approach gives me the flexibility I am looking for, whilst maximising the tax/SS efficiencies available to myself and hopefully minimising the taxation on the way out.

Will have to look into that as above as sounds like any gains we may make in piling her pension up would be irradicated whwn it comes to getting access to that money.

Now I know how our actual pension work in terms of in esting I will look into the options for withdrawal and see what implications that has based on the amounts we would be putting in

MallyGirl wrote: »

Annuities have their place but I don't think they are the norm any more.

You can take 25% tax free and then draw down from the remainder. The remainder will be liable for income tax but if you keep it under £11,850 (current 0% band, changes year on year) then you pay no tax on it.

You can take no lump sum and just have each drawdown amount 25% tax free and 75% taxable

There are many, many options here.

Okay I get you now, will consider the drawdown but dont think we have it in our plans. So on the drawdown aslong as both of us were never drawing more than £11,850 each then would be tax free.