How do i go about getting a pension?
Discussion
Im 27, self employed (via ltd company). I have 0 pension, I've previously not done anything just incase i drop dead before pension age!!
However now I am edging further towards middle aged
i realise this is not the wisest policy, incase i survive.....
So how does one go about sorting a pension?
I assume i can do this via my company with pre-tax contributions?
Do i need to get my accountant to sort this? or are there companies that sort this out?
Anyone any advice? I have absolutely no clue how pensions work.
Cheers
However now I am edging further towards middle aged
i realise this is not the wisest policy, incase i survive.....So how does one go about sorting a pension?
I assume i can do this via my company with pre-tax contributions?
Do i need to get my accountant to sort this? or are there companies that sort this out?
Anyone any advice? I have absolutely no clue how pensions work.
Cheers
If you are a director of a company, you could open a SIPP, then get your company to pay contributions directly into it.
Then you can invest that money however you see fit. You can buy funds, shares, bonds, whatever; one option is a mix of funds and bonds/gilts.
I found monevator a good site to browse. Be wary of platform fees and fund management fees which could eat into the profits you make.
Then you can invest that money however you see fit. You can buy funds, shares, bonds, whatever; one option is a mix of funds and bonds/gilts.
I found monevator a good site to browse. Be wary of platform fees and fund management fees which could eat into the profits you make.
You don't need to get your accountant to sort it, but any decent one will likely have connections with Financial Advisors (IFA or tied) who can help you.
I met mine on a skiing holiday of all things, him and his son were at the adjacent table for dinner every night. We got on well and I had no idea he was in pensions until the very last night. My wife (in education) ended up placing an apprentice with him for work, she reported back that he was a straight person to deal with, I got chatting to him about pensions some months later. I've set up mine and recommended him to two colleagues, four years on all of us very happy with how they are performing.
Without getting into the perennial PH debate about the 'worth' of pensions, as someone in a similar position to yourself, albeit nearly 20yrs older, I am using mine purely as a tax efficient savings vehicle - money (up to £40k) goes in off the company top line before tax, in 10yrs time (current rules) I can take out 25% from my pension tax free. Beyond that I'm happy with any growth I get - after a shaky first year mine has actually done very well, far better than I expected.
I also had a heart attack 3 months ago. Whilst happy to survive it, I was also pleased (as far as one can be!) that my pension pot would all be payable to my wife and 2yo son as a death benefit if I suffered an untimely demise before retirement. That's probably not the kind of thing you'll be thinking of just yet, but I now look at it as a massive top up to my life insurance, enough to put my kid through a great school if I croaked and left a widow and son. That sort of thing didn't even cross my mind when I took it out, I just nodded as I filled in the forms, but having had a brush with my mortality it strikes me as a great thing to have.
I met mine on a skiing holiday of all things, him and his son were at the adjacent table for dinner every night. We got on well and I had no idea he was in pensions until the very last night. My wife (in education) ended up placing an apprentice with him for work, she reported back that he was a straight person to deal with, I got chatting to him about pensions some months later. I've set up mine and recommended him to two colleagues, four years on all of us very happy with how they are performing.
Without getting into the perennial PH debate about the 'worth' of pensions, as someone in a similar position to yourself, albeit nearly 20yrs older, I am using mine purely as a tax efficient savings vehicle - money (up to £40k) goes in off the company top line before tax, in 10yrs time (current rules) I can take out 25% from my pension tax free. Beyond that I'm happy with any growth I get - after a shaky first year mine has actually done very well, far better than I expected.
I also had a heart attack 3 months ago. Whilst happy to survive it, I was also pleased (as far as one can be!) that my pension pot would all be payable to my wife and 2yo son as a death benefit if I suffered an untimely demise before retirement. That's probably not the kind of thing you'll be thinking of just yet, but I now look at it as a massive top up to my life insurance, enough to put my kid through a great school if I croaked and left a widow and son. That sort of thing didn't even cross my mind when I took it out, I just nodded as I filled in the forms, but having had a brush with my mortality it strikes me as a great thing to have.
Edited by PurpleTurtle on Tuesday 11th July 16:56
essayer said:
If you are a director of a company, you could open a SIPP, then get your company to pay contributions directly into it.
Then you can invest that money however you see fit. You can buy funds, shares, bonds, whatever; one option is a mix of funds and bonds/gilts.
I found monevator a good site to browse. Be wary of platform fees and fund management fees which could eat into the profits you make.
What he said.Then you can invest that money however you see fit. You can buy funds, shares, bonds, whatever; one option is a mix of funds and bonds/gilts.
I found monevator a good site to browse. Be wary of platform fees and fund management fees which could eat into the profits you make.
If you need a bit of guidance, it would be worth your while paying for advice. If you are happy to set it all up yourself, there are numerous low cost platforms you can use online.
essayer said:
Be wary of platform fees and fund management fees which could eat into the profits you make.
I'd be more wary of achieving typical private investor returns http://www.fool.co.uk/investing/2014/10/24/the-fts...
Do your homework.
It sounds boring but you have to do it. There are lots of "hidden" fees.
Platform charge, advice charge, set up charge, fund charge, monthly admin charge it goes on and on. Some providers will keep the fees low but charge many different ones, others just have a few fees but they are higher %.
You might think they don't sound too bad but when you add them up and realise your provider is taking 1,2 maybe even 3% off you in some cases it can be a serious cost. Make sure what ever provider you go with you can monitor everything online and track performance. DIY is an option in the early days too. I think having professional take a look once you get a bit of a pot built up is also a good idea.
You also have the great position that you have an LTD so you can make payments into the SIPP as stated above.
It sounds boring but you have to do it. There are lots of "hidden" fees.
Platform charge, advice charge, set up charge, fund charge, monthly admin charge it goes on and on. Some providers will keep the fees low but charge many different ones, others just have a few fees but they are higher %.
You might think they don't sound too bad but when you add them up and realise your provider is taking 1,2 maybe even 3% off you in some cases it can be a serious cost. Make sure what ever provider you go with you can monitor everything online and track performance. DIY is an option in the early days too. I think having professional take a look once you get a bit of a pot built up is also a good idea.
You also have the great position that you have an LTD so you can make payments into the SIPP as stated above.
Don't think its already been said.
In your position you can put in up to £40k a year (regardless of whatever salary you take PAYE). You can carry forward up to three years unused allowance (£120K), as long as a scheme has been in place for each of those years. In other words even if you don't plan on paying in its worth setting one up ASAP so you can use the three years when suits.
Company contributions will come out pre tax i.e. as an expense. You will therefore 'save' the potential 20% corporation tax.
As you correctly assume the government won't let you have it until you are 58 (I think for you) or terminally ill unless you pay through the nose, plus a kidney and your first born so its worth not putting all your spare cash into . I'd be getting a good ISA buffer first but all depends on your circumstances / outlook.#
As for the mechanics, Hargreaves Lansdown or Fidelity are good starting points for an easy to manage SIPP. You can put SIPP money into pretty much any wrapper that you can an ISA. The PH crew like Vanguard Life almost as much as MX5s.
Just to add the current government hasn't been at all small company friendly so the situation isn't likely to get better, only worse IMO.
In your position you can put in up to £40k a year (regardless of whatever salary you take PAYE). You can carry forward up to three years unused allowance (£120K), as long as a scheme has been in place for each of those years. In other words even if you don't plan on paying in its worth setting one up ASAP so you can use the three years when suits.
Company contributions will come out pre tax i.e. as an expense. You will therefore 'save' the potential 20% corporation tax.
As you correctly assume the government won't let you have it until you are 58 (I think for you) or terminally ill unless you pay through the nose, plus a kidney and your first born so its worth not putting all your spare cash into . I'd be getting a good ISA buffer first but all depends on your circumstances / outlook.#
As for the mechanics, Hargreaves Lansdown or Fidelity are good starting points for an easy to manage SIPP. You can put SIPP money into pretty much any wrapper that you can an ISA. The PH crew like Vanguard Life almost as much as MX5s.
Just to add the current government hasn't been at all small company friendly so the situation isn't likely to get better, only worse IMO.
trickywoo said:
Don't think its already been said.
In your position you can put in up to £40k a year (regardless of whatever salary you take PAYE). You can carry forward up to three years unused allowance (£120K), as long as a scheme has been in place for each of those years. In other words even if you don't plan on paying in its worth setting one up ASAP so you can use the three years when suits.
Company contributions will come out pre tax i.e. as an expense. You will therefore 'save' the potential 20% corporation tax.
As you correctly assume the government won't let you have it until you are 58 (I think for you) or terminally ill unless you pay through the nose, plus a kidney and your first born so its worth not putting all your spare cash into . I'd be getting a good ISA buffer first but all depends on your circumstances / outlook.#
As for the mechanics, Hargreaves Lansdown or Fidelity are good starting points for an easy to manage SIPP. You can put SIPP money into pretty much any wrapper that you can an ISA. The PH crew like Vanguard Life almost as much as MX5s.
Just to add the current government hasn't been at all small company friendly so the situation isn't likely to get better, only worse IMO.
I assume you are unqualified.In your position you can put in up to £40k a year (regardless of whatever salary you take PAYE). You can carry forward up to three years unused allowance (£120K), as long as a scheme has been in place for each of those years. In other words even if you don't plan on paying in its worth setting one up ASAP so you can use the three years when suits.
Company contributions will come out pre tax i.e. as an expense. You will therefore 'save' the potential 20% corporation tax.
As you correctly assume the government won't let you have it until you are 58 (I think for you) or terminally ill unless you pay through the nose, plus a kidney and your first born so its worth not putting all your spare cash into . I'd be getting a good ISA buffer first but all depends on your circumstances / outlook.#
As for the mechanics, Hargreaves Lansdown or Fidelity are good starting points for an easy to manage SIPP. You can put SIPP money into pretty much any wrapper that you can an ISA. The PH crew like Vanguard Life almost as much as MX5s.
Just to add the current government hasn't been at all small company friendly so the situation isn't likely to get better, only worse IMO.
The maximum annual contribution allowed is 100% of annual salary, capped at 40K. Same applies to using carry forward. You cannot just chuck in £120K regardless.
I also have no idea where you got age 58 from. Pension benefits can be taken from Age 55.
SIPPS and ISAs are wrappers themselves, not the underlying investments within them.
I can only hope you don't give medical advice as well, or people are likely to die
Hyena said:
I assume you are unqualified.
The maximum annual contribution allowed is 100% of annual salary, capped at 40K. Same applies to using carry forward. You cannot just chuck in £120K regardless.
I also have no idea where you got age 58 from. Pension benefits can be taken from Age 55.
SIPPS and ISAs are wrappers themselves, not the underlying investments within them.
I can only hope you don't give medical advice as well, or people are likely to die
I can only assume you are a fThe maximum annual contribution allowed is 100% of annual salary, capped at 40K. Same applies to using carry forward. You cannot just chuck in £120K regardless.
I also have no idea where you got age 58 from. Pension benefits can be taken from Age 55.
SIPPS and ISAs are wrappers themselves, not the underlying investments within them.
I can only hope you don't give medical advice as well, or people are likely to die
kwit and doll out unqualified advice to other fkwits.Op's company can carry forward three years unused contributions as I correctly stated.
I won't hold my breath for an apology but I hope you are at least a little embarrassed by incorrectly trying to correct someone being helpful.
I should have been clearer about the company contribution aspect but assumed that most people would have appreciated that from the detail provided by op.
Pension age is also increasing and will be a lot closer to my estimate than yours for op.
Just to add in case you hadn't gathered you are an absolute idiot.
Edited by trickywoo on Wednesday 12th July 20:25
Edited by trickywoo on Wednesday 12th July 20:29
trickywoo said:
I can only assume you are a fkwit and doll out unqualified advice to other fkwits.
Op's company can carry forward three years unused contributions as I correctly stated.
I won't hold my breath for an apology but I hope you are at least a little embarrassed by incorrectly trying to correct someone being helpful.
I should have been clearer about the company contribution aspect but assumed that most people would have appreciated that from the detail provided by op.
Pension age is also increasing and will be a lot closer to my estimate than yours for op.
Just to add in case you hadn't gathered you are an absolute idiot.
Oh dear fella. You have obviously never heard of "When in hole, stop digging".kwit and doll out unqualified advice to other fkwits.Op's company can carry forward three years unused contributions as I correctly stated.
I won't hold my breath for an apology but I hope you are at least a little embarrassed by incorrectly trying to correct someone being helpful.
I should have been clearer about the company contribution aspect but assumed that most people would have appreciated that from the detail provided by op.
Pension age is also increasing and will be a lot closer to my estimate than yours for op.
Just to add in case you hadn't gathered you are an absolute idiot.
Edited by trickywoo on Wednesday 12th July 20:25
Edited by trickywoo on Wednesday 12th July 20:29
I notice you have already edited out (twice) most of your original post, having belatedly realised that you were talking absolute garbage.
But just to confirm what I said about contribution limits, if yo don't believe me, then believe the Government:https://www.pensionsadvisoryservice.org.uk/about-p...
I did not challenge your statement about 3 years carry forward being available, merely corrected your assertion that £120K can be automatically carried forward - it is a maximum of those 3 years income, capped at £120K. There is a subtle difference. Perhaps it went over your head.
With regard to the minimum pension age, you confidently asserted that for the OPs age, it would be 58. That is pure speculation, crystal ball territory. So as a piece of factual information, it was total crud,
As I pointed out in my original post, the only factual statement one can make is that the current earliest pension age is 55. End of.
The Government has made no statement on future rises in that age. It may or may not happen.
I won't hold my breath for an apology but I hope you are at least a little embarrassed by incorrectly trying to correct someone (who actually knows what they are talking about) being helpful.
Hyena said:
Oh dear fella. You have obviously never heard of "When in hole, stop digging".
I notice you have already edited out (twice) most of your original post, having belatedly realised that you were talking absolute garbage. But just to confirm what I said about contribution limits, if yo don't believe me, then believe the Government:
https://www.pensionsadvisoryservice.org.uk/about-p...
I did not challenge your statement about 3 years carry forward being available, merely corrected your assertion that £120K can be automatically carried forward - it is a maximum of those 3 years income, capped at £120K. There is a subtle difference. Perhaps it went over your head.
With regard to the minimum pension age, you confidently asserted that for the OPs age, it would be 58. That is pure speculation, crystal ball territory. So as a piece of factual information, it was total crud,
As I pointed out in my original post, the only factual statement one can make is that the current earliest pension age is 55. End of.
The Government has made no statement on future rises in that age. It may or may not happen.
I won't hold my breath for an apology but I hope you are at least a little embarrassed by incorrectly trying to correct someone (who actually knows what they are talking about) being helpful.
You are the idiot here. £120k is the automatic three year carry forward allowance for company contributions. No cap. The OP can pay himself £8k a year PAYE and no pension at all until the end of the third year term and then the company can put in £120k, assuming a pension has at least been in place for those three years. Of course it only really makes sense if there is enough profit to offset the full £120k in year three.I notice you have already edited out (twice) most of your original post, having belatedly realised that you were talking absolute garbage.
But just to confirm what I said about contribution limits, if yo don't believe me, then believe the Government:https://www.pensionsadvisoryservice.org.uk/about-p...
I did not challenge your statement about 3 years carry forward being available, merely corrected your assertion that £120K can be automatically carried forward - it is a maximum of those 3 years income, capped at £120K. There is a subtle difference. Perhaps it went over your head.
With regard to the minimum pension age, you confidently asserted that for the OPs age, it would be 58. That is pure speculation, crystal ball territory. So as a piece of factual information, it was total crud,
As I pointed out in my original post, the only factual statement one can make is that the current earliest pension age is 55. End of.
The Government has made no statement on future rises in that age. It may or may not happen.
I won't hold my breath for an apology but I hope you are at least a little embarrassed by incorrectly trying to correct someone (who actually knows what they are talking about) being helpful.
You seem to have zero understanding of the differences between personal pension contributions and company contributions for the director of a limited company.
The private pension age is already 57 for 2028, when OP will be 38 years old. A long way off retirement still.
Before you aggressively say someone is talking crap (when they are not) get your facts right. I edited my post as I simply couldn't beleive what an idiot you are and wanted to point out as much of your idiocy as possible.
trickywoo said:
You are the idiot here. £120k is the automatic three year carry forward allowance for company contributions. No cap. The OP can pay himself £8k a year PAYE and no pension at all until the end of the third year term and then the company can put in £120k, assuming a pension has at least been in place for those three years. Of course it only really makes sense if there is enough profit to offset the full £120k in year three.
You seem to have zero understanding of the differences between personal pension contributions and company contributions for the director of a limited company.
The private pension age is already 57 for 2028, when OP will be 38 years old. A long way off retirement still.
Before you aggressively say someone is talking crap (when they are not) get your facts right. I edited my post as I simply couldn't beleive what an idiot you are and wanted to point out as much of your idiocy as possible.
Still digging that hole then, dickywoo You seem to have zero understanding of the differences between personal pension contributions and company contributions for the director of a limited company.
The private pension age is already 57 for 2028, when OP will be 38 years old. A long way off retirement still.
Before you aggressively say someone is talking crap (when they are not) get your facts right. I edited my post as I simply couldn't beleive what an idiot you are and wanted to point out as much of your idiocy as possible.
Here's a link which confirms that you are talking absolute garbage about company contributions
http://www.contractorcalculator.co.uk/pensions_con...
So, who exactly has "zero understanding", dickywoo?
Oh, and by the way, if you were going to edit your post to "prove what an idiot you are , and wanted to point out as much of that idiocy as possible". then you would have added to your post. Not DELETED half of it
Before you aggressively say someone is talking crap (when they are not) get your facts right. dickywoo old fruit.
Hyena said:
trickywoo said:
You are the idiot here. £120k is the automatic three year carry forward allowance for company contributions. No cap. The OP can pay himself £8k a year PAYE and no pension at all until the end of the third year term and then the company can put in £120k, assuming a pension has at least been in place for those three years. Of course it only really makes sense if there is enough profit to offset the full £120k in year three.
You seem to have zero understanding of the differences between personal pension contributions and company contributions for the director of a limited company.
The private pension age is already 57 for 2028, when OP will be 38 years old. A long way off retirement still.
Before you aggressively say someone is talking crap (when they are not) get your facts right. I edited my post as I simply couldn't beleive what an idiot you are and wanted to point out as much of your idiocy as possible.
Still digging that hole then, dickywoo You seem to have zero understanding of the differences between personal pension contributions and company contributions for the director of a limited company.
The private pension age is already 57 for 2028, when OP will be 38 years old. A long way off retirement still.
Before you aggressively say someone is talking crap (when they are not) get your facts right. I edited my post as I simply couldn't beleive what an idiot you are and wanted to point out as much of your idiocy as possible.
Here's a link which confirms that you are talking absolute garbage about company contributions
http://www.contractorcalculator.co.uk/pensions_con...
So, who exactly has "zero understanding", dickywoo?
Oh, and by the way, if you were going to edit your post to "prove what an idiot you are , and wanted to point out as much of that idiocy as possible". then you would have added to your post. Not DELETED half of it
Before you aggressively say someone is talking crap (when they are not) get your facts right. dickywoo old fruit.
Eg PAYE income 10k, employer pension contribution 40k is perfectly fine.
Company profit in that period is irrelevant as long as it has the funds to pay it. Pension contributions just being a valid company expense.
Bristol spark said:
Thank you guys, will defiantly look at the SIPP.
Don't get hung up on "SIPP".Pension = tax wrapper.
Behind that, there's an investment.
SIPP means you manage the investment yourself. Self Invested Personal Pension.
"Normal" pension means somebody else manages it, you're just picking a fund or basket of funds, which happen to come with that wrapper around 'em.
Im going to hijack the thread here as this is relevant to me.
Im now 37 and have no pension for various reasons, now is the time i can afford to put some half decent money aside., i also have a limited company.
I've got a couple of questions though.
am i committed to paying x amount each month? what if things get hard and i decide i can't do it for a while.
can i use a company which just does everything for me. I lay driveways, i have lots of knowledge on all things paving, however choosing which companies i invest in is similar to red or black from my pov
I've been considering a stocks and shares isa but the simp sounds more tax efficient.
Im now 37 and have no pension for various reasons, now is the time i can afford to put some half decent money aside., i also have a limited company.
I've got a couple of questions though.
am i committed to paying x amount each month? what if things get hard and i decide i can't do it for a while.
can i use a company which just does everything for me. I lay driveways, i have lots of knowledge on all things paving, however choosing which companies i invest in is similar to red or black from my pov
I've been considering a stocks and shares isa but the simp sounds more tax efficient.
STURBO said:
My understanding is that a company can pay contributions of up to 40k per year per employee. And back date 3 years if a pension was in place. This is regardless of the PAYE income that employee gets.
Eg PAYE income 10k, employer pension contribution 40k is perfectly fine.
Company profit in that period is irrelevant as long as it has the funds to pay it. Pension contributions just being a valid company expense.
“Following pensions reforms, contractors can invest up to £40,000 each year to a lifetime allowance of £1.25m into their pension pot. Although it is important that the amounts must not be larger than your corporate income for the year of the contribution, otherwise there might be questions from HMRC about whether the money was actually sourced from your trading activities,” Eg PAYE income 10k, employer pension contribution 40k is perfectly fine.
Company profit in that period is irrelevant as long as it has the funds to pay it. Pension contributions just being a valid company expense.
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