Slightly Different Pension Question.....
Discussion
If you were in the very lucky position of having a decent pension fund at the age of 47, would you keep paying into it?
My advisor is pushing me to take advantage of the tax position and pump more money into my fund. I have all of last years allowance available, and just under the full allowance available in the current year - I sold my business in April 2015, and have not contributed to it since.
With restrictions via a lifetime allowance, and an expected doubling of the fund every ten years is there any point?
Currently, at review in January, the fund sits at £370K. I do not expect to need either the lump sum at 55 years of age, nor in fact to draw anything from the pension for at least 20 years. I do have funds available to max it out every year, should it be the sensible option to take - I'm just not seeing the sense of it at present.
Would you keep paying in?
My advisor is pushing me to take advantage of the tax position and pump more money into my fund. I have all of last years allowance available, and just under the full allowance available in the current year - I sold my business in April 2015, and have not contributed to it since.
With restrictions via a lifetime allowance, and an expected doubling of the fund every ten years is there any point?
Currently, at review in January, the fund sits at £370K. I do not expect to need either the lump sum at 55 years of age, nor in fact to draw anything from the pension for at least 20 years. I do have funds available to max it out every year, should it be the sensible option to take - I'm just not seeing the sense of it at present.
Would you keep paying in?
i think that size of pot would yield a replacement income of about £14k/annum? So if that's all that is need to maintain the lifestyle you plan then I would look at all future payments as a simple means to claim back your income tax in exchange for not being able to access it for 8 years. If it is excess cash that you'd be saving anyway and you're a higher rate payer then it might be a very efficient way to save.
PurpleMoonlight said:
Is this a personal contribution the adviser is suggesting?
Have you sufficient earned income to justify it?
The funding would be via a company I own that holds property. Yes, there is sufficient income for maximum contributions. Have you sufficient earned income to justify it?
With regard to the income the pot can generate now, I don't actually need it, and to be honest, do not think I will ever actually need it. I use EIS schemes to mitigate income tax at present, so that's not an issue either.
I accept the doubling is optimistic at present rates, but historically, it's not far out. Of course, given the size of the pot now, I don't need it to double at all. Even at 5% annual growth it will push the limit thereabouts.
The crystallising of the pot at 55 has been discussed - but I can't see the sense of extra fees and a reduction of cash to fund it, if it is going to hit that level anyway. I guess I am looking to see if anyone can flick the switch in my head to light the idea up. My adviser has yet to do that!
If you're asking whether or not you should be sticking more money into a fund you don't and never will need to use I'd say stick it here instead:
http://www.jairahfunds.com
It's even a tax deductible expenditure if tax planning interests you.
http://www.jairahfunds.com
It's even a tax deductible expenditure if tax planning interests you.
PurpleMoonlight said:
Does HMRC deem it a reading or investment company?
To be honest, I have not come across the term "reading company" before - can you elaborate. It is a standard ltd vehicle that owns property assets that are let on full repairing long term leases to other businesses. VAT registered, of course, and pays corporation tax at standard levels. Of course, any pension payment by the company would be tax deductible for corporation tax purposes. I also own a FIC, and I use the term loosely, but income from there is by way of a return of interest free input loan made by me originally.
drainbrain said:
If you're asking whether or not you should be sticking more money into a fund you don't and never will need to use I'd say stick it here instead:
http://www.jairahfunds.com
It's even a tax deductible expenditure if tax planning interests you.
Would you be the businessman/property owner listed under the tab 'our story' by any chance?http://www.jairahfunds.com
It's even a tax deductible expenditure if tax planning interests you.
Hainey said:
Would you be the businessman/property owner listed under the tab 'our story' by any chance?
I don't think so because I'm not on the board tho I was asked recently to join as 1 or 2 of the members are getting a bit decrepit. It's almost certainly my ex-business partner Raggi Ram. We did very very well and one day (he would've been in his early 30's then) he decided enough was enough and went off and started Jairah. His Scottish and German portfolios give him a very decent income but he works full time on the charity. I'm mostly involved in the Orissa project. These houses cost about £350 to build and we're well on the way to number 1000.
You'd be very welcome to join as a donor. Eventually you realise it's what you're meant to do with surplus funds you don't need and can't figure out what to do with. Pointless accumulation and consumerism really isn't satisfying to people who're cursed with the ability to think.
bogie said:
Yes is the simple answer
...im 47 now and would like the option of working less at 55, and even £370k x 2 wont be that much to live on for 30 years or so.....
Would it seem different if at 47 you had already been retired for two years (the property company takes up less than a week of my time each year) and had more than enough to live on now, without any further investments?...im 47 now and would like the option of working less at 55, and even £370k x 2 wont be that much to live on for 30 years or so.....
bradders said:
bogie said:
Yes is the simple answer
...im 47 now and would like the option of working less at 55, and even £370k x 2 wont be that much to live on for 30 years or so.....
Would it seem different if at 47 you had already been retired for two years (the property company takes up less than a week of my time each year) and had more than enough to live on now, without any further investments?...im 47 now and would like the option of working less at 55, and even £370k x 2 wont be that much to live on for 30 years or so.....
rockin said:
Only if you don't like getting 40% tax relief.
And if you're too wealthy to care, why ask the question?
I cover all my income tax with EIS investments on an annual basis - in other words, I currently get total income tax relief. I don't earn enough that I cannot cover all my income tax obligations completely in this way. I cannot foresee not doing this unless HMRC alter their rules again. Feel free to look into the maximum investments allowed into EIS/SEIS and take it from there.And if you're too wealthy to care, why ask the question?
The too wealthy to care statement seems a little like a swipe - and certainly not in the spirit of the question I asked - if your pension fund was already likely to hit the maximum lifetime allowance, would you plough more money into it now, such that it hits the limit sooner, given, as I've said, there is little benefit to me from a tax perspective. I am thinking it isn't necessary, but wondered if anyone had a reason to do so that I have not considered.
bradders said:
Would it seem different if at 47 you had already been retired for two years (the property company takes up less than a week of my time each year) and had more than enough to live on now, without any further investments?
Yes it would, I'd be even more likely to fill up my SIPP allowance, you dont need the money, you earn enough to still pay high levels of tax, so then why wouldnt you claim back 45%+ tax back from the government?Feel free to then give it away, however you should claim it.
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