+5% or AVC's

Dandytf
Dandytf Posts: 4,819 Forumite
First Anniversary Name Dropper First Post
in Pensions, annuities & retirement planning
Simple questions as I've decided to stay part time permanently.
My recent few years employee DC plan is going to be depleted in a few year with potential return amount (thinking ahead as I'm only 45)
Anyway I had raised from standard 1% to5% contributions -matched by employers.
To increase my potential return if and when I retire.
Is it financially more sensible if I increase above 5% (no additional match from employers above 5%)
Or maybe AVC's could make more sense -though I've no idea of AVC's-do I choose new % or amount payable from salary each month.
Thanks in advance mser;s -note sure if my question is valid.
Replenished CRA Reports.2020 Nissan Leaf 128-149 miles top charge. Savings depleted. VM Stream tv M250 Volted to M350 then M500 since returned to 1gb

Comments

  • dunstonh
    dunstonh Posts: 116,358 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Is it financially more sensible if I increase above 5% (no additional match from employers above 5%)

    Any extra is good.
    Or maybe AVC's could make more sense -though I've no idea of AVC's-do I choose new % or amount payable from salary each month.

    Most firms no longer offer AVCs (the requirement to offer them ended in 2006). And most money purchase occupational pensions didnt have AVCs to begin with as they could handle any increases in the main scheme.

    Nowadays, its mainly individual schemes (PPP, SHP or SIPP) vs AVC or in-house hybrid scheme. Sometimes ISAs come into play too.

    it all comes down to tax position - now and future - and what in-house option exists (and what it offers) vs the individual options you can use.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Dandytf
    Dandytf Posts: 4,819 Forumite
    First Anniversary Name Dropper First Post
    With current employers DC scheme my combined level is 15% 5% from me 10% from employers.
    I'm unable to increase this without using avc's
    What I've decided tonight is +5% avc's in effect doubling my contributions.
    At least it's something.
    Thanks mser's
    Replenished CRA Reports.2020 Nissan Leaf 128-149 miles top charge. Savings depleted. VM Stream tv M250 Volted to M350 then M500 since returned to 1gb
  • Dandytf
    Dandytf Posts: 4,819 Forumite
    First Anniversary Name Dropper First Post
    dunstonh wrote: »
    Any extra is good.

    Most firms no longer offer AVCs (the requirement to offer them ended in 2006). And most money purchase occupational pensions didnt have AVCs to begin with as they could handle any increases in the main scheme.

    Nowadays, its mainly individual schemes (PPP, SHP or SIPP) vs AVC or in-house hybrid scheme. Sometimes ISAs come into play too.

    it all comes down to tax position - now and future - and what in-house option exists (and what it offers) vs the individual options you can use.

    I pay very little tax whilst part time-hope my pension contributions doesn't effect tax though I'm certainly not investing anywhere near 40k per annum
    Replenished CRA Reports.2020 Nissan Leaf 128-149 miles top charge. Savings depleted. VM Stream tv M250 Volted to M350 then M500 since returned to 1gb
  • Dox
    Dox Posts: 3,116 Forumite
    First Anniversary Name Dropper First Post
    Dandytf wrote: »
    I pay very little tax whilst part time-hope my pension contributions doesn't effect tax though I'm certainly not investing anywhere near 40k per annum

    Please don't 'hope' - just check! You will still get full tax relief on your contributions provided that your contributions + your employer's contributions + tax relief don't exceed your earnings in the tax year. By the sound of it they won't. The pension provider will reclaim tax at basic rate (even if you haven't actually paid any) and add this to your 'pot'.
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