Setting up a bonus pension
Discussion
Hello all
I have a good civil service pension which I make the mandatory contributions into and I also overpay an avc paye gross of 250 a month.
However for tax purposes (to get my net adjusted income to below 50k) I need to set up a seperate pension. I need to do this fairly quickly because I've calculated I need to pay about 6/7k into it before the end of this financial year, and about 9k into it yearly for the next 3 or 4 years. After that it's going to be too much of a cash drag on my salary to do so and I'll knock the child benefit on the head and just take the extra income as taxed income.
I had hoped to set up a civil service avc scheme with legal and general but it seems you can only contribute towards this paye. I want to do a single lump sum every February.
So with my hopes dashed of putting in the money into the civil service legal and general scheme I now need to look to the wider market. I don't want to put the lump sum into my civil service pension because I'm going to use this new pension to bridge the gap between retiring in my late 50s early 60s and taking my civil service pension at around age 65.
I've invested with vanguard in the past and have an account set up with them. To be honest the first year or two my investments did really well then they came off the boil somewhat and it left a bit of a bad taste in my mouth. Their fees are very reasonable.
I don't want anything complicated or too risky (some risk is OK as I have 20 years working left give or take).
Has anyone got any suggestions about a fairly simple to set up and use pension scheme?
Cheers for any thoughts.
I have a good civil service pension which I make the mandatory contributions into and I also overpay an avc paye gross of 250 a month.
However for tax purposes (to get my net adjusted income to below 50k) I need to set up a seperate pension. I need to do this fairly quickly because I've calculated I need to pay about 6/7k into it before the end of this financial year, and about 9k into it yearly for the next 3 or 4 years. After that it's going to be too much of a cash drag on my salary to do so and I'll knock the child benefit on the head and just take the extra income as taxed income.
I had hoped to set up a civil service avc scheme with legal and general but it seems you can only contribute towards this paye. I want to do a single lump sum every February.
So with my hopes dashed of putting in the money into the civil service legal and general scheme I now need to look to the wider market. I don't want to put the lump sum into my civil service pension because I'm going to use this new pension to bridge the gap between retiring in my late 50s early 60s and taking my civil service pension at around age 65.
I've invested with vanguard in the past and have an account set up with them. To be honest the first year or two my investments did really well then they came off the boil somewhat and it left a bit of a bad taste in my mouth. Their fees are very reasonable.
I don't want anything complicated or too risky (some risk is OK as I have 20 years working left give or take).
Has anyone got any suggestions about a fairly simple to set up and use pension scheme?
Cheers for any thoughts.
I use PensionBee. It was very easy to set up and I currently pay in DD every month from my company. However I know it is easy to pay into it net of my salary if I wanted to. It gives me the option to pay monthly or one off or whatever.
Regarding the performance, I've only had it probably 6 months and its up (albeit very slightly). I am looking to have it for the next 30 years+ so not particularly interested short term, I'm confident these sort of things generally do well over that sort of timescale.
Regarding the performance, I've only had it probably 6 months and its up (albeit very slightly). I am looking to have it for the next 30 years+ so not particularly interested short term, I'm confident these sort of things generally do well over that sort of timescale.
princeperch said:
I've invested with vanguard in the past and have an account set up with them. To be honest the first year or two my investments did really well then they came off the boil somewhat and it left a bit of a bad taste in my mouth. Their fees are very reasonable.
You'll most likely have been invested in funds based on trackers. In other words, the drop off in performance is simply what the stock market did and is not Vanguard's fault. Far too many people are too short sighted when it comes to investing, think in 5yr windows not a couple. There will be good years, there will be flat years and there will be bad years. That's just how it is. No I get that. Which is why I sold out and now have 100k in isas and decent yielding cash accounts spread over my name and my wifes.ill need it for my remortgage in q1 2027 anyway so it probably was for the best.
Vanguard is put on a pedestal very frequently however my experience of opening up (and transferring isas) to them was not positive at all. A lot of f
king about and it took a long time with a lot of chasing by me. I think they compensated me 100 quid for the hassle but it wasn't a good start.
It does look however like vanguard are the cheapest fee wise to set up a small pension like this with so I might have to go back with my tail twixt my legs.
Vanguard is put on a pedestal very frequently however my experience of opening up (and transferring isas) to them was not positive at all. A lot of f
king about and it took a long time with a lot of chasing by me. I think they compensated me 100 quid for the hassle but it wasn't a good start. It does look however like vanguard are the cheapest fee wise to set up a small pension like this with so I might have to go back with my tail twixt my legs.
Vanguard are OK (I use them for an ISA) but there have apparently been issues with customer service around things like transfers etc.
If you need to sort this quickly main thing is getting the money in the SIPP wrapper you don't have to invest it and you can always transfer it further down the line.
If you need to sort this quickly main thing is getting the money in the SIPP wrapper you don't have to invest it and you can always transfer it further down the line.
I use Fidelity for my SIPP, have a Vanguard ISA too...IMO the Fidelity interface is 'nicer' but functionally both are fine. Agree on the Vanguard customer service, standards have slipped on query response times and I do wonder if they are struggling to manage the scale of their retail customer base. I recently transferred my S&SISA away from them but only due to lack of fund choices, would use them again.
I can recommend AJBELL too though only have a S&S LISA with them and whilst the interface is ok it looks busier compared to Vanguard or Fidelity.
I can recommend AJBELL too though only have a S&S LISA with them and whilst the interface is ok it looks busier compared to Vanguard or Fidelity.
Perch you are in almost the exact same situation as me in terms of employer, age, child benefit, and contribution amounts.
Edit to add: your profile pic is even the same MX5 as I recently sold! Is this a horror story? Are you taking over my life?
You say VG hasn't performed that well for you but it's what you invest in rather than the platform. I use VG due to the low platform and fund fees. You just need to set up a SIPP, which is easy.
With your thoughts on risk, you may be interested in VG's "Target Retirement" funds. You can buy one with a Target date you wish retire at (or earlier/later to adjust risk to your appetite) and the fund will automatically shift weightings to bonds to lower risk as the date approaches.
Edit to add: your profile pic is even the same MX5 as I recently sold! Is this a horror story? Are you taking over my life?
You say VG hasn't performed that well for you but it's what you invest in rather than the platform. I use VG due to the low platform and fund fees. You just need to set up a SIPP, which is easy.
With your thoughts on risk, you may be interested in VG's "Target Retirement" funds. You can buy one with a Target date you wish retire at (or earlier/later to adjust risk to your appetite) and the fund will automatically shift weightings to bonds to lower risk as the date approaches.
Edited by ILikeCake on Monday 8th January 22:27
ILikeCake said:
With your thoughts on risk, you may be interested in VG's "Target Retirement" funds. You can buy one with a Target date you wish retire at (or earlier/later to adjust risk to your appetite) and the fund will automatically shift weightings to bonds to lower risk as the date approaches.
I set one of these up a couple of years back and it was simple.Alot of employer pensions allow you to modify your avc each month, if yours does can't you just increase it for Feb to pay alot more in and leave space for bonus so you don't go over 50k ? This is what I have to do, I get bonus in March usually try and guess my bonus in Dec then increase my contributions for Jan and Feb so I have space for bonus and not go over threshold. My previous job it was easier I could just tell them when I got told my bonus I wanted it to all go in my pension may be your employer also has that option.
I like cake perhaps we are the same person in a Tyler durden fight club type way? I am Jack's raging bile duct etc.
Anyway one other thing has just occurred to me and I am not sure if anyone can help.
So I whack in 7k to my newly set up vanguard pension before the end of the tax year. I then wait for my p60 and do my tax return for the 23/24 tax year.
I then expect hmrc will do their calculation and tell me I am due a refund. Some of that will be at the higher rate and some will be at the basic rate.
What does this mean for my net adjustable income? I. E I have salary sacrificed to get below 50k (just) and I am then sent a cheque for a few k in respect of the tax relief. Do I then need to account for that as income in my 2024/2025 tax return when I do one? Which means I need to salary sacrifice ever more as the years roll on?
Sounds like a dim question I'm sure but my tax affairs have been relatively straight forward until now and this sort of thing always gives me a headache.
Anyway one other thing has just occurred to me and I am not sure if anyone can help.
So I whack in 7k to my newly set up vanguard pension before the end of the tax year. I then wait for my p60 and do my tax return for the 23/24 tax year.
I then expect hmrc will do their calculation and tell me I am due a refund. Some of that will be at the higher rate and some will be at the basic rate.
What does this mean for my net adjustable income? I. E I have salary sacrificed to get below 50k (just) and I am then sent a cheque for a few k in respect of the tax relief. Do I then need to account for that as income in my 2024/2025 tax return when I do one? Which means I need to salary sacrifice ever more as the years roll on?
Sounds like a dim question I'm sure but my tax affairs have been relatively straight forward until now and this sort of thing always gives me a headache.
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