Workplace pension L&G
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My basic salary is 28,000 but overtime is regularly available so most years it's well over.
My employer will not go higher than the 3% min.
I understand more how a sipp works now thanks guys0 -
You would be better off paying extra via salary sacrifice in to the works scheme.
£100 paid in to a personal pension (SIPP, stakeholder, etc) cost you £80.
£100 paid in to works scheme via SS costs you only £68.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
And to be 100% clear this is also the case with your workplace pension . It is also invested in funds that can go up or down.Your pension fund can go up or down, depending on where exactly you have chosen to invest your pension savings (i.e. the type of fund - equities, deposit etc).0 -
Clouddog how does this work
If I paid £68 the government tops it to £100 or is just the equivalent as I won't get taxed on the money ?0 -
Clouddog how does this work
If I paid £68 the government tops it to £100 or is just the equivalent as I won't get taxed on the money ?
No.
You are coming at it from the 'net' position, i.e. what am I paying in to the account. With pensions it is easier to work it out from the gross position.
Under Salary Sacrifice you don't actually pay the money, your employer has promised to make this payment on your behalf. With SS you gain both the savings in tax (20%) and NI contributions (12%) for a basic rate tax payer.
If you 'sacrifice' £100 in to your works pension, because you have not actually received the £100 you benefit by not paying 20% / £20 in tax. You also benefit by not having to pay 12% / £12 National Insurance on the £100. The net effect on your take home pay is that the £100 contribution only reduces your pay by £68. Basically you are saving an additional 12% of NI contributions via your works SS.
If you had a SIPP, you would pay £80 and the Government would top it up to £100. The difference (£20) is actually 25% of the £80 you paid but with pensions it is always worth working the numbers out from the gross (£100) position, so £20 is 20% of £100.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Great info clears everything up
Looks like the way forward for me is to up my workplace pension 0 -
As has previously been stated, whether you up your contributions or not, review where your pension is invested to make sure it's either not languishing in a poorly performing fund or invested in a fund which does not match your attitude to risk/fit your investment timescale. A lot of company schemes are set up to simply put all employees in what are called 'default' funds, regardless of the above. It's your money, you carry the investment risk so make sure you get involved. To reduce risk as you get closer to your 'retirement age'; the age they have assumed you will start accessing the pension. You might find your pension is in a 'Lifestyle strategy' meaning the pension provider will move your pension to less risky assets as you get closer to the retirement age. Read your annual statements rather than just filing them away.Give it all you've got
Perrycomover :j0 -
Just logged into my work place pension for the first time
Seems my pension is in the 'L&G PMC Multi-assest 3' fund'
Am I right in saying this is low risk and probably won't lose or gain anything ?
Hasn't got great reviews online what are you guys recommendations0 -
No one will (should) recommend an investment for you.
How old are you?Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
I'm 25 now but trying to plan for the future earlier rather than later
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