Pension Contributions
Discussion
bennno said:
So say you are in a role where you earn circa that value but its variable, i.e. might be £130k or might be £170k how does the pension annual allowance now work? Is there a risk that if you clip over £150k you suddenly owe the tax relief back on your contributions?
Yes, that's my understanding.
jonny996 said:
bennno said:
Lifetime allowance is £1M. can anybody more knowledgable than me advise that with average growth over the next 23 years what a present fund value of £350k would be worth?
are you really planning on working until you are 65? why not keep contributions at same level & retire a few years earlysidicks said:
bennno said:
So say you are in a role where you earn circa that value but its variable, i.e. might be £130k or might be £170k how does the pension annual allowance now work? Is there a risk that if you clip over £150k you suddenly owe the tax relief back on your contributions?
Yes, that's my understanding.editted to add, it's also on total earnings not just taxable pay as defined on a p60, you will need to understand employer contributions as well as your own in determining total income vs the 150k
Edited by SMB on Friday 13th May 15:22
K12beano said:
ho can afford to retire on a mere million - especially a powerfully built company director......
The point is that £1m will 'only' buy you an inflation-linked pension of circa £30k p.a. at current annuity rates.So those people who don't have the benefit of public sector FS schemes need to be saving massive amounts for comparable income, yet the lifetime allowance is now going to massively restrict their ability to do so.
sidicks said:
K12beano said:
ho can afford to retire on a mere million - especially a powerfully built company director......
The point is that £1m will 'only' buy you an inflation-linked pension of circa £30k p.a. at current annuity rates.So those people who don't have the benefit of public sector FS schemes need to be saving massive amounts for comparable income, yet the lifetime allowance is now going to massively restrict their ability to do so.
SMB said:
the stepped allowance starts at 40k, and decreases by £1 for every £2 you earn over 150k, ie drops back to 30k if you earn 170k, so by 210k your max allowance is 10k. ( assuming no carry forward of allowance from prior years)
editted to add, it's also on total earnings not just taxable pay as defined on a p60, you will need to understand employer contributions as well as your own in determining total income vs the 150k
The point at which you need to start considering the tapered allowance is at £110k.....editted to add, it's also on total earnings not just taxable pay as defined on a p60, you will need to understand employer contributions as well as your own in determining total income vs the 150k
Edited by SMB on Friday 13th May 15:22
Purplemoonlight posted up an excellent article which is staring me in the face but I've no idea how to link it on my new iMac. Fooookin Apple....
Jockman said:
SMB said:
the stepped allowance starts at 40k, and decreases by £1 for every £2 you earn over 150k, ie drops back to 30k if you earn 170k, so by 210k your max allowance is 10k. ( assuming no carry forward of allowance from prior years)
editted to add, it's also on total earnings not just taxable pay as defined on a p60, you will need to understand employer contributions as well as your own in determining total income vs the 150k
The point at which you need to start considering the tapered allowance is at £110k.....editted to add, it's also on total earnings not just taxable pay as defined on a p60, you will need to understand employer contributions as well as your own in determining total income vs the 150k
Edited by SMB on Friday 13th May 15:22
Purplemoonlight posted up an excellent article which is staring me in the face but I've no idea how to link it on my new iMac. Fooookin Apple....
More here
http://www.hmrc.gov.uk/tools/annualallowancelimit/...
Edited by SMB on Saturday 14th May 08:15
bennno said:
Should I cut my pension contributions and divert more towards mortgage or other uses.
Aged 42, £350k in pension, £20k per year going in...... (unclear if that about right, ahead of where I should be etc)
I personally think your current plans sound likely to give you a nice pension at retirement. Aged 42, £350k in pension, £20k per year going in...... (unclear if that about right, ahead of where I should be etc)
Presuming your mortgage is affordable and on one of the current low rate mortgages, I would leave it as is.
The government's intention seems to be to make it harder for higher rate tax payers to get full pension tax relief going forward, so probably better to continue with it as is for the time being.
EddieSteadyGo said:
I personally think your current plans sound likely to give you a nice pension at retirement.
Presuming your mortgage is affordable and on one of the current low rate mortgages, I would leave it as is.
The government's intention seems to be to make it harder for higher rate tax payers to get full pension tax relief going forward, so probably better to continue with it as is for the time being.
Presuming your mortgage is affordable and on one of the current low rate mortgages, I would leave it as is.
The government's intention seems to be to make it harder for higher rate tax payers to get full pension tax relief going forward, so probably better to continue with it as is for the time being.
EddieSteadyGo said:
The government's intention seems to be to make it harder for higher rate tax payers to get full pension tax relief going forward, so probably better to continue with it as is for the time being.
I reckon the introduction of the 'Lifetime ISA' is the writing on the wall for 40% relief. Now it's simple for the government - you increase the allowed limits on the lifetime Isa whilst simultaneously withdrawing tax deductibility of all pension contributions. I think this works out worse for a 40% taxpayer than just capping relief at 20%.
Either way, I've upped the AVCs this year...
sidicks said:
The point is that £1m will 'only' buy you an inflation-linked pension of circa £30k p.a. at current annuity rates.
So those people who don't have the benefit of public sector FS schemes need to be saving massive amounts for comparable income, yet the lifetime allowance is now going to massively restrict their ability to do so.
Thats the thing. £1m in property will get you about the same income perhaps a bit higher £40k gross but you will have the property/rent increasing and you can sell up and cash the £1m or pass on to children/cats home if you wish.So those people who don't have the benefit of public sector FS schemes need to be saving massive amounts for comparable income, yet the lifetime allowance is now going to massively restrict their ability to do so.
superlightr said:
sidicks said:
The point is that £1m will 'only' buy you an inflation-linked pension of circa £30k p.a. at current annuity rates.
So those people who don't have the benefit of public sector FS schemes need to be saving massive amounts for comparable income, yet the lifetime allowance is now going to massively restrict their ability to do so.
Thats the thing. £1m in property will get you about the same income perhaps a bit higher £40k gross but you will have the property/rent increasing and you can sell up and cash the £1m or pass on to children/cats home if you wish.So those people who don't have the benefit of public sector FS schemes need to be saving massive amounts for comparable income, yet the lifetime allowance is now going to massively restrict their ability to do so.
plus you dont have a govt extending your retirement age or when you can take your own private pension.
superlightr said:
Thats the thing. £1m in property will get you about the same income perhaps a bit higher £40k gross but you will have the property/rent increasing and you can sell up and cash the £1m or pass on to children/cats home if you wish.
Except the income from an annuity is guaranteed, whereas property values can fall (and have in the past), rental voids can occur and properties require ongoing maintenance.The buy-to-let solution may be more suitable for some, but let's not compare apples and pears and pretend they are identical! And that's ignoring the tax advantages pre-retirement.
sidicks said:
superlightr said:
Thats the thing. £1m in property will get you about the same income perhaps a bit higher £40k gross but you will have the property/rent increasing and you can sell up and cash the £1m or pass on to children/cats home if you wish.
Except the income from an annuity is guaranteed, whereas property values can fall (and have in the past), rental voids can occur and properties require ongoing maintenance.The buy-to-let solution may be more suitable for some, but let's not compare apples and pears and pretend they are identical! And that's ignoring the tax advantages pre-retirement.
Property prices if sensible are pretty solid in certain areas of the SE as are rental prices. Yes maintenance has to be planned. You still have your asset whereas if you have an annuity you have either fek all of £0 when you die or a massively reduced income for spouse etc for a small amount of time.
Sidicks I would genuinely be interested in what would be viewed as a 'normal' annuity situation when the main person dies. Is my view that the either it would end or be massively reduced outdated?
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