Pension for LTD co Director

[996owner]

Hi,

Other half has her own business, She is the sole director.

Her pension contributions are not salary sacrifice, I've advised her to change this.

She had a conversation with her accountant today as the year end is approaching, they said Get financial advise (standard response really). They said look for a "directors pension scheme" I've never heard of this and after a quick google search nothing comes up.

Anyone heard of such a scheme?


Cheers,

[theboss]

She should simply make employer's contributions directly into a relevant scheme or a SIPP - this would be the same as salary sacrifice for tax purposes but doesn't have to be described as such nor involve sacrificing anything.

[guyvert1]

A quick google search of 'directors pension scheme' comes back with alot of relevant info , so not sure where you're searching ?

[gerlewis]

We do like 'theboss' said above.

Setup a Sipp account (we use AJbell) and then fill out an employers contribution form.
This way you can lump lots of money in, and potentially reduce your corporation tax bill down to zero.

Also, you could be named as a director too and do a separate pot.

[malks222]

- get her to open a ‘SIPP’ (I use hargreaves lansdown, many other providers available)
- get limited company to make ‘employers pension contribution’ to SIPP
- do some research on what stocks/ shares/ funds to invest in (could leave the money in ‘cash’ within the sipp (but obvs makes no gains/ losses)) (as a starter look at vanguard global funds- low fees and cover the whole world/ many sectors)
- starting now is better than starting tomorrow……. I kept putting it off, as I wasn’t sure what I was going to do, was I doing the right thing….. then one day decided- just get started! it’s financially beneficial to the limited company (reduces corp tax) and better for me because I’m at least putting something away for the future
- once you’ve started, you can start to do more research, look at what options are there….. but it’s all too easy to just keep putting off!

[996owner]

thanks for the replies :-)

I was searching LTD company director pension, I've since found a video here https://getpenfold.com/pension-guides/what-is-a-di...

[996owner]

malks222 said:

but it’s all too easy to just keep putting off!

Exactly, this has been an ongoing conversation for about 2 years.

[GuigiaroBertone]

malks222 said:

- get her to open a ‘SIPP’ (I use hargreaves lansdown, many other providers available)
- get limited company to make ‘employers pension contribution’ to SIPP
- do some research on what stocks/ shares/ funds to invest in (could leave the money in ‘cash’ within the sipp (but obvs makes no gains/ losses)) (as a starter look at vanguard global funds- low fees and cover the whole world/ many sectors)
- starting now is better than starting tomorrow……. I kept putting it off, as I wasn’t sure what I was going to do, was I doing the right thing….. then one day decided- just get started! it’s financially beneficial to the limited company (reduces corp tax) and better for me because I’m at least putting something away for the future
- once you’ve started, you can start to do more research, look at what options are there….. but it’s all too easy to just keep putting off!

This- exactly.

Up to £60k can be contributed this tax year. This comes directly off the profits- reducing Corp tax.

Unfortunately she can't carry forward previously unused allowance (previous 3 years/£40k per year) unless registered in a pension scheme.


The best time to plant a tree is 20 years ago. The second best time is today.

[theboss]

996owner said:

malks222 said:

but it’s all too easy to just keep putting off!

Exactly, this has been an ongoing conversation for about 2 years.

It'll keep going on until Labour 'overhauls' tax relief on pension contributions and then we'll all wish we took maximum advantage of such generous treatment whilst we had the chance.

[TownIdiot]

I'd be looking for a new accountant rather than an IFA after that conversation.

[GuigiaroBertone]

TownIdiot said:

I'd be looking for a new accountant rather than an IFA after that conversation.

Yes- an accountant can't necessarily advise on pension and investment products, nor give personal financial advice, but every accountant should be making their Ltd co director clients aware that company pension contributions are usually more tax efficient than using their personal funds.

Surely they mentioned this to your wife?

[malks222]

996owner said:

malks222 said:

but it’s all too easy to just keep putting off!

Exactly, this has been an ongoing conversation for about 2 years.

yep, I was the same, except I think I managed to put it off for 3-4yrs…… but one day I just decided to get it done (after hearing about ‘funds’ and different options from here). I just went to H&L opened a SIPP, had heard good things about ‘fundsmith equity’, made my initial deposit, set up the direct debit for monthly deposits and just let it do its thing……. I’ve kept reading/ researching and keeping an eye on what I’m doing.

I could’ve done better, and I could also have done worse, but if I hadn’t started, I’d still be putting it off.

I’m now nearly 7 years into my savings/ pension/ retirement plan/ forecast (turn 40 next year), and despite covid/ ukraine/ liz truss impacts on the markets, I’m still on track (actually slightly ahead) with an aim to retire at 60. I’m not claiming to be an investing genius, or ‘know the markets’ I just stick what I can away each month into solid funds and just let them do their thing.

From what I know now, depending on your time frame, I think you could do a lot worse than opening a SIPP with vanguard (some of the lowest fees around) sticking monthly contributions into ‘global equity accumulation’ or one of the ‘life strategy’ funds.

[996owner]

Thanks again everyone.
Not exactly happy with the accounts people to be honest over the pension topic. That said to be fair they have been great over the years. At least its moving in the right direction now

[UpTheIron]

TownIdiot said:

I'd be looking for a new accountant rather than an IFA after that conversation.

+1

[LeighW]

GuigiaroBertone said:

TownIdiot said:

I'd be looking for a new accountant rather than an IFA after that conversation.

Yes- an accountant can't necessarily advise on pension and investment products, nor give personal financial advice, but every accountant should be making their Ltd co director clients aware that company pension contributions are usually more tax efficient than using their personal funds.

Surely they mentioned this to your wife?

It's a standard conversation with clients, "I can't give financial advice, but this will save you tax..."

[WayOutWest]

Good advice above, yeah very simple to set up a SIPP and use to make company employer contributions. About the only free lunch left for contractors.

SIPPs are so flexible. I went back to perm, in which case the salary sacrifice scheme my employer offered then made more sense, but when I leave it will all get transferred back into my SIPP anyway.

[Abc321]

I use PensionBee for my Ltd Co contributions. Easy to top up as just do a bank transfer for random contributions and I have a standing order set up monthly too. Only had it maybe 18 months and currently 19% up so would definitely recommend!

Happy to send a referral link (if that's allowed?), we get 100 quid each I think.