Pensions

[WildTurkey]

if you salary sacrifice for your pension does this mean you only get taxed on your salary after your pension has been deducted?

In that case if someone exceeded the 25% tax limit could they pay x amount to bring them within the threshold?

Does that s apply to the forced govt pensions currently being rolled out?

 

[Goat Eyes]

Exactly as you described.

My company has just gone down the salary sacrifice route (if we wanted) but for some reason I seem to be worse off than the old way. I need to query it.

 

[RossTheNinja]

Exactly as you described.

My company has just gone down the salary sacrifice route (if we wanted) but for some reason I seem to be worse off than the old way. I need to query it.

Concurred.
I think you do, cos you should save on both tax and NI. (Employer will save on NI too)

 

[WildTurkey]

Can’t imagine the govt letting you get away with something that easy though?

Or will it benefit them in the long run as those contributing significant amounts to a pension will be less of a burden on the state in future years?

 

[RossTheNinja]

Can’t imagine the govt letting you get away with something that easy though?

Or will it benefit them in the long run as those contributing significant amounts to a pension will be less of a burden on the state in future years?

They're clamping down on other schemes as people started taking the piss, like pcs and stuff.

Theyre desperate for people to pay in to pensions and are upping the minimums for workplace schemes in April. I reckon they're here to stay.

 

[Goat Eyes]

They're clamping down on other schemes as people started taking the piss, like pcs and stuff.

Theyre desperate for people to pay in to pensions and are upping the minimums for workplace schemes in April. I reckon they're here to stay.

3% then 5% so you’ll have no choice but to have a half decent pension if you’re a young’un.

 

[WildTurkey]

They're clamping down on other schemes as people started taking the piss, like pcs and stuff.

Theyre desperate for people to pay in to pensions and are upping the minimums for workplace schemes in April. I reckon they're here to stay.

so if someone earns £65k a year and pay £20k in pension contributions they get taxed at the lower rate (if its £45k)?

Seems like a big cost to the govt considering the 6% ISA’s are long gone

 

[Goat Eyes]

so if someone earns £65k a year and pay £20k in pension contributions they get taxed at the lower rate (if its £45k)?

Seems like a big cost to the govt considering the 6% ISA’s are long gone

There’ll be a cap. Plus the majority of people wouldn’t be saving 30% of their salary.

Your theory is sound though.

It also means if you are entitled to any benefits you may lose those (or likewise qualify for some). It’s fairly negligible though.

 

[The Great Soprendo]

Cap is 40k I think?

Given new drawdown rules it's the best way to save IMO.

 

[RossTheNinja]

3% then 5% so you’ll have no choice but to have a half decent pension if you’re a young’un.

You can still opt out like

There’ll be a cap. Plus the majority of people wouldn’t be saving 30% of their salary.

Your theory is sound though.

It also means if you are entitled to any benefits you may lose those (or likewise qualify for some). It’s fairly negligible though.

There is but its canny big IIRC

 

[Goat Eyes]

You can still opt out like


There is but its canny big IIRC

Oh aye, there’s that too.

You can still opt out like


There is but its canny big IIRC

Having a quick read and it looks like £40k contribution, so a lot.

Also, most employers will only match up to about 10% and cap your contributions around the same.

 

[Kent_Mackem]

Cap is 40k I think?

Given new drawdown rules it's the best way to save IMO.

I believe you can backdate 3 years though so you can increase that on the first, second and third years that you do it.

 

[Lonz]

There's an annual cap and a lifetime allowance.

 

[Patch]

so if someone earns £65k a year and pay £20k in pension contributions they get taxed at the lower rate (if its £45k)?

Seems like a big cost to the govt considering the 6% ISA’s are long gone

It's tax deferral: you'll pay tax when you take the money out of the pension but...

... tax will be paid at the marginal rate which will probably be less than 40%. Also, 25% of what you take out is tax free and, as Ross pointed out, you won't pay NI if it's salary sacrifice: either on the contribution or the withdrawal. I don't think this last point counts for shit if you're paying 40% as your NI contribution drop down to about 2% at that point anyway. Every little helps though.

My plan is to ram as much as I can afford into my pension in the last few years: it's a no brainer.

 

[RossTheNinja]

Top tip: Just before you retire, if you've got savings, stick them in to premium bonds. When you're means tested and have been paying in all your life, you might get a bit support as they won't count that money.