SIPP as well as Workplace Pension??
Discussion
A friend of mine has a workplace pension and he has paid the maximum into it for previous years that they will allow him to based on his salary.
Assuming in future years he continues to pay the maximum in then is there any point in taking out a SIPP in addition to the workplace pension (aside form in the SIPP he can choose his own funds etc)?
What I am getting at is his workplace pension is tax efficient and gets a contribution from the government and his employer, so he maxes this out each year. However if he also had a SIPP then could it put additional money into that even though he has (and will continue to) max out his workplace pension?
PS - When I say "max out his workplace pension" I mean for his low end salary level for which he contributes about £20k a year, but I believe the government allows you to pay up to £40k per year into pensions. Can my friend pay an additional £20k per annum into a SIPP?
tia
Assuming in future years he continues to pay the maximum in then is there any point in taking out a SIPP in addition to the workplace pension (aside form in the SIPP he can choose his own funds etc)?
What I am getting at is his workplace pension is tax efficient and gets a contribution from the government and his employer, so he maxes this out each year. However if he also had a SIPP then could it put additional money into that even though he has (and will continue to) max out his workplace pension?
PS - When I say "max out his workplace pension" I mean for his low end salary level for which he contributes about £20k a year, but I believe the government allows you to pay up to £40k per year into pensions. Can my friend pay an additional £20k per annum into a SIPP?
tia
Absolutely.
My workplace pension is crap. 5% personal and 5% company. So I have a SIPP in addition. The benefits over a company scheme is that it is much easier to control where you invest and how much and how often you pay in. If you are a higher rate tax payer and on a DC scheme as poor as mine its a no brainer frankly
My workplace pension is crap. 5% personal and 5% company. So I have a SIPP in addition. The benefits over a company scheme is that it is much easier to control where you invest and how much and how often you pay in. If you are a higher rate tax payer and on a DC scheme as poor as mine its a no brainer frankly
Taita said:
Can he salary sacrifice from his employer salary, into his workplace pension?
eg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
If it's salary sacrifice he will save employees NI...and ask the company to pay him their saved employers NIeg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
Abdul Abulbul Amir said:
Taita said:
Can he salary sacrifice from his employer salary, into his workplace pension?
eg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
If it's salary sacrifice he will save employees NI...and ask the company to pay him their saved employers NIeg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
If he earns more than 40k, then no reason he can’t put 20 into a work pension and the net equivalent of the other 20 gross into a SIPP.
Depending on the scheme rules, he may also be able to periodically (eg annually) transfer what is in the work pension into the SIPP if he wants to.
If he’s earning even more, he can add up to the last 3 years excess over the work pension amount into the SIPP as well.
Depending on the scheme rules, he may also be able to periodically (eg annually) transfer what is in the work pension into the SIPP if he wants to.
If he’s earning even more, he can add up to the last 3 years excess over the work pension amount into the SIPP as well.
Abdul Abulbul Amir said:
Taita said:
Can he salary sacrifice from his employer salary, into his workplace pension?
eg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
If it's salary sacrifice he will save employees NI...and ask the company to pay him their saved employers NIeg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
Abdul Abulbul Amir said:
How much is his low end salary?
Just got that, it's £21k p.a. He asks his payroll person each year what he can add to max this out each year then pays that from savings. He is aged 59.He wants to keep the company scheme going as above as it seems to give him extra payments from his company and is relatively secure.
However a SIPP in addition to, and not in place of, (I believe) would offer some more tax advantages. In my head I have a £40k contribution limit to all pensions but may be wrong.
tia
Taita said:
Can he salary sacrifice from his employer salary, into his workplace pension?
eg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
He is already doing salary sacrifice into his workplace pension, as much as he is allowed to each year.eg to pay into his SIPP it will need to be taxed as income first -> paid into SIPP --> maybe claim back tax relief.
MikeStroud said:
Abdul Abulbul Amir said:
How much is his low end salary?
Just got that, it's £21k p.a. He asks his payroll person each year what he can add to max this out each year then pays that from savings. He is aged 59.He wants to keep the company scheme going as above as it seems to give him extra payments from his company and is relatively secure.
However a SIPP in addition to, and not in place of, (I believe) would offer some more tax advantages. In my head I have a £40k contribution limit to all pensions but may be wrong.
tia
MikeStroud said:
However a SIPP in addition to, and not in place of, (I believe) would offer some more tax advantages. In my head I have a £40k contribution limit to all pensions but may be wrong.
100% of income up to 40khttps://www.gov.uk/tax-on-your-private-pension
Burwood said:
Not many do that (pay 100% employer NI). My wifes employer give back 50% which is fair. Remember the LTA. It won't take that long to breach 1,083k and then get whacked with a 55% tax. You're better off topping up spouses pension(if that's an option).
You only pay the tax after you've crystalised £1073k. This will go up (fingers crossed). It's still worth paying into the pension if you're getting employer contributions. Don't turn down free money! Gassing Station | Finance | Top of Page | What's New | My Stuff