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  • FIRST POST
    • kobie
    • By kobie 5th Jul 18, 10:03 AM
    • 4Posts
    • 1Thanks
    kobie
    Live of savings and max pension ?
    • #1
    • 5th Jul 18, 10:03 AM
    Live of savings and max pension ? 5th Jul 18 at 10:03 AM
    hi
    Need some advice.

    I have received a windfall of about 100K after I have cleared my mortgage.
    So wondering what to do...

    Pension - I have a rerasonalble pension fund of 500K, aged 51 so I thought that I'd do this:
    Ask my employer to max my pension contributions to 40K from my salary so reducing my NI and tax while I live off the 100K.
    If my calculations are correct then my pension investment would be gross so no income tax plus there would be no NI.
    I should be able to do this for 3 years and my intention is to retire at 60....

    Does that plan seem reasonable ?
    Or any other advice welcome.

    cheers
    K
Page 1
    • tacpot12
    • By tacpot12 5th Jul 18, 10:22 AM
    • 1,382 Posts
    • 1,187 Thanks
    tacpot12
    • #2
    • 5th Jul 18, 10:22 AM
    • #2
    • 5th Jul 18, 10:22 AM
    Seems reasonable. In theory you could pay the 100 straight into your pension using the carry forward rules, but you would end up paying more tax and NI with this route. With your approach, you would be delaying your investment in the markets, but with Brexit on the way I think this is probably a sensible strategy.

    Make sure you don't run your savings down to zero, you should keep an emergency fund in cash.
    • BoGoF
    • By BoGoF 5th Jul 18, 11:30 AM
    • 3,478 Posts
    • 2,787 Thanks
    BoGoF
    • #3
    • 5th Jul 18, 11:30 AM
    • #3
    • 5th Jul 18, 11:30 AM
    What is your salary?
    • glider3560
    • By glider3560 5th Jul 18, 4:34 PM
    • 3,654 Posts
    • 2,340 Thanks
    glider3560
    • #4
    • 5th Jul 18, 4:34 PM
    • #4
    • 5th Jul 18, 4:34 PM
    Ask my employer to max my pension contributions to 40K from my salary so reducing my NI and tax while I live off the 100K.
    Originally posted by kobie
    You only reduce the NI if the pension contributions are made via salary sacrifice. If they are deducted in the "normal way" then you will save income tax, but not NI.


    In the latter case, you could pay into any pension, not just your employer's and get the tax benefit.

    • kidmugsy
    • By kidmugsy 5th Jul 18, 10:13 PM
    • 11,598 Posts
    • 8,122 Thanks
    kidmugsy
    • #5
    • 5th Jul 18, 10:13 PM
    • #5
    • 5th Jul 18, 10:13 PM
    Answer BoGof!
    Free the dunston one next time too.
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