Financed lifestyles
Discussion
Taaaaang said:
I'm 37 and don't have a pension. I have significant savings but I can't help but feel that it's only a matter of time before I get f
ked by the govt in some way if I start a pension.
It's a really tricky situation and I'm not too sure what my next move is.
Perhaps, but you've also fked by the govt in some way if I start a pension.It's a really tricky situation and I'm not too sure what my next move is.
ked yourself over, as pensions are just a tax break. So you'd have been far better economically saving in one than just by saving the same money outside one.Taaaaang said:
I'm 37 and don't have a pension. I have significant savings but I can't help but feel that it's only a matter of time before I get fked by the govt in some way if I start a pension.
It's a really tricky situation and I'm not too sure what my next move is.
I thought like that until mid 30s then read some investment books, and started to think differently, particularly due to more tax efficient saving like ISA and SIPP. A "pension" is a product that is sold by financial services companies or provided by employers/government. What you have available these days with a SIPP account is really just a tax efficient savings account that you cannot access until 55 years old that you can use to purchase all kinds of different financial assets. ked by the govt in some way if I start a pension.It's a really tricky situation and I'm not too sure what my next move is.
Say you earn £120k gross and dont bother with a pension at all you will take home £6178 a month
If you now save say 25% of gross pay (£2500 per month) into your pension you now take home £5012
Due to tax relief of £20k per year you now get £50,000 going into your pension for a net cost to you of £1166 a month or £13992 a year
Can you think of another way you can turn £13992 into £50k before you even invest it in other assets ?
This tax break may not be as generous forever, so I am trying to make the most of it whilst its there
Work it out for yourself with your own salary here https://www.moneysavingexpert.com/tax-calculator/
bogie said:
Say you earn £120k gross and dont bother with a pension at all you will take home £6178 a month
If you now save say 25% of gross pay (£2500 per month) into your pension you now take home £5012
Due to tax relief of £20k per year you now get £50,000 going into your pension for a net cost to you of £1166 a month or £13992 a year
If you now save say 25% of gross pay (£2500 per month) into your pension you now take home £5012
Due to tax relief of £20k per year you now get £50,000 going into your pension for a net cost to you of £1166 a month or £13992 a year
Such a 'PH' post.
'Say you earn 5 times average salary.......'
Sorry, I know the point you're making, but picking £120k as a base salary is hardly relateable to most people. And I'm not sure your figures add up either?
Condi said:
bogie said:
Say you earn £120k gross and dont bother with a pension at all you will take home £6178 a month
If you now save say 25% of gross pay (£2500 per month) into your pension you now take home £5012
Due to tax relief of £20k per year you now get £50,000 going into your pension for a net cost to you of £1166 a month or £13992 a year
If you now save say 25% of gross pay (£2500 per month) into your pension you now take home £5012
Due to tax relief of £20k per year you now get £50,000 going into your pension for a net cost to you of £1166 a month or £13992 a year
Such a 'PH' post.
'Say you earn 5 times average salary.......'
Sorry, I know the point you're making, but picking £120k as a base salary is hardly relateable to most people. And I'm not sure your figures add up either?
Maybe the govt might change the rules in future....maybe so, but it should not be the majority of tax payers they target, it will be the minority of high earners. Its a good idea to make the most of any tax free/efficient savings vehicle that is available, for so long as they are. Certainly wish I had when I was in my 20s and 30s ....50 now and playing catch up.
But what did I do in my 20s and 30s ? mmm....lived a debt fueled lifestyle, spent it as fast as I was earning it...on cars, bikes, holidays and other fun stuff I didn't really need
Edited by bogie on Sunday 21st July 21:10
Taaaaang said:
I'm 37 and don't have a pension. I have significant savings but I can't help but feel that it's only a matter of time before I get fked by the govt in some way if I start a pension.
It's a really tricky situation and I'm not too sure what my next move is.
Why not live on your savings and put your earnings into a SIPP to gain the instant tax relief and possible NI relief depending how the company run the payroll/pension deductions?ked by the govt in some way if I start a pension.It's a really tricky situation and I'm not too sure what my next move is.
I have worked as a civil servant in central government for 9.5 years now. I didn't have a pension before I joined. I got a statement through the other day saying I have used 26pc of the lifetime allowance In the 9.5 yrs I've been in the scheme. I am 34.
Every time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
Every time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
princeperch said:
I have worked as a civil servant in central government for 9.5 years now. I didn't have a pension before I joined. I got a statement through the other day saying I have used 26pc of the lifetime allowance In the 9.5 yrs I've been in the scheme. I am 34.
Every time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
You've put away £250k in less than 10 years? No wonder the rest of the country is fEvery time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
ked if our taxes are paying for £25k a year pensions in the public sector. Condi said:
princeperch said:
I have worked as a civil servant in central government for 9.5 years now. I didn't have a pension before I joined. I got a statement through the other day saying I have used 26pc of the lifetime allowance In the 9.5 yrs I've been in the scheme. I am 34.
Every time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
You've put away £250k in less than 10 years? No wonder the rest of the country is fEvery time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
ked if our taxes are paying for £25k a year pensions in the public sector. k!RobinBanks said:
Condi said:
princeperch said:
I have worked as a civil servant in central government for 9.5 years now. I didn't have a pension before I joined. I got a statement through the other day saying I have used 26pc of the lifetime allowance In the 9.5 yrs I've been in the scheme. I am 34.
Every time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
You've put away £250k in less than 10 years? No wonder the rest of the country is fEvery time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
ked if our taxes are paying for £25k a year pensions in the public sector. k!It’s relatively easy to work out what the salary point would need to be, to make leaving financially worthwhile (notwithstanding career prospects) whilst using relief on pension contributions to accumulate 25k a year into your retirement pot.
For defined benefit pensions, it’s generally a fair bit more.
Condi said:
princeperch said:
I have worked as a civil servant in central government for 9.5 years now. I didn't have a pension before I joined. I got a statement through the other day saying I have used 26pc of the lifetime allowance In the 9.5 yrs I've been in the scheme. I am 34.
Every time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
You've put away £250k in less than 10 years? No wonder the rest of the country is fEvery time I think about leaving and going to earn 15/20k more working elsewhere (which has been on my mind a bit lately) am going to pull that letter out and slap myself in the face with it.
ked if our taxes are paying for £25k a year pensions in the public sector. As we are seeing from media coverage of the NHS pensions / tax issues for medics, the valuations of public sector pensions can be misleading and hard to understand.
The poster above with 9.5 years in a public sector scheme is most likely quoting the standard valuation that's been given to him - which is theoretically comparable to an annuity. This is a problem, because it gives public sector schemes enormous valuations that aren't really justified or related to reality. It would be the same as taking the theoretical annuity value of the £8k p/a state pension... that would give a huge figure too, but it doesn't follow that most people have a ?£400k pension pot!
If this is the basis of the £250k, one should instead try quoting 20x annual benefit as a more realistic value (which, I suspect, will be lower).
I'm not questioning the security of such a scheme, but saving in a SIPP gives considerably greater freedoms and possibilities than a classic public sector scheme - while giving much more scope to foresee and avoid tax issues.
The poster above with 9.5 years in a public sector scheme is most likely quoting the standard valuation that's been given to him - which is theoretically comparable to an annuity. This is a problem, because it gives public sector schemes enormous valuations that aren't really justified or related to reality. It would be the same as taking the theoretical annuity value of the £8k p/a state pension... that would give a huge figure too, but it doesn't follow that most people have a ?£400k pension pot!
If this is the basis of the £250k, one should instead try quoting 20x annual benefit as a more realistic value (which, I suspect, will be lower).
I'm not questioning the security of such a scheme, but saving in a SIPP gives considerably greater freedoms and possibilities than a classic public sector scheme - while giving much more scope to foresee and avoid tax issues.
This will be a very unpopular post on here ... so get the pitchforks ready:
86.5% of new cars are bought on finance. Financing a depreciating asset, aka Bad Leverage.
But tell anyone and they will say "It is only such a small part of my income, I can afford it."
Buddy, the fact you had to put it on Finance is the definition of not being able to afford it.
86.5% of new cars are bought on finance. Financing a depreciating asset, aka Bad Leverage.
But tell anyone and they will say "It is only such a small part of my income, I can afford it."
Buddy, the fact you had to put it on Finance is the definition of not being able to afford it.
I 8 a 4RE said:
This will be a very unpopular post on here ... so get the pitchforks ready:
86.5% of new cars are bought on finance. Financing a depreciating asset, aka Bad Leverage.
But tell anyone and they will say "It is only such a small part of my income, I can afford it."
Buddy, the fact you had to put it on Finance is the definition of not being able to afford it.
BOOM! 86.5% of new cars are bought on finance. Financing a depreciating asset, aka Bad Leverage.
But tell anyone and they will say "It is only such a small part of my income, I can afford it."
Buddy, the fact you had to put it on Finance is the definition of not being able to afford it.
But but but “my investments are 3x the interest on my PCP”
Edited by RobinBanks on Monday 22 July 10:06
The Cardinal said:
As we are seeing from media coverage of the NHS pensions / tax issues for medics, the valuations of public sector pensions can be misleading and hard to understand.
The poster above with 9.5 years in a public sector scheme is most likely quoting the standard valuation that's been given to him - which is theoretically comparable to an annuity. This is a problem, because it gives public sector schemes enormous valuations that aren't really justified or related to reality. It would be the same as taking the theoretical annuity value of the £8k p/a state pension... that would give a huge figure too, but it doesn't follow that most people have a ?£400k pension pot!
If this is the basis of the £250k, one should instead try quoting 20x annual benefit as a more realistic value (which, I suspect, will be lower).
I'm not questioning the security of such a scheme, but saving in a SIPP gives considerably greater freedoms and possibilities than a classic public sector scheme - while giving much more scope to foresee and avoid tax issues.
Given that the pension is highly likely to be inflation linked, why would a 20x multiplier be more realistic? The truth is that the market cost would be more like 40x.The poster above with 9.5 years in a public sector scheme is most likely quoting the standard valuation that's been given to him - which is theoretically comparable to an annuity. This is a problem, because it gives public sector schemes enormous valuations that aren't really justified or related to reality. It would be the same as taking the theoretical annuity value of the £8k p/a state pension... that would give a huge figure too, but it doesn't follow that most people have a ?£400k pension pot!
If this is the basis of the £250k, one should instead try quoting 20x annual benefit as a more realistic value (which, I suspect, will be lower).
I'm not questioning the security of such a scheme, but saving in a SIPP gives considerably greater freedoms and possibilities than a classic public sector scheme - while giving much more scope to foresee and avoid tax issues.
I see from the statement that what I've built up to date will bring an income of 12.5k at 65.
I suspect the reality is that I won't want to work until I'm 65 and would probably want to retire in my high 50s so that is going to be reduced by a fair amount.
It doesn't give me a projection as to what the full pension would be worth at 65 if I carry on working another 25/30 years but I think I've seen a figure in the past that it would be worth about 27/28 grand if I could soldier on until I'm 65 or about 21/22k if I bail out at 5-10 years before that.
I doubt there will be a meaningful or non means tested state pension by the time I am old and grey.
I suspect the reality is that I won't want to work until I'm 65 and would probably want to retire in my high 50s so that is going to be reduced by a fair amount.
It doesn't give me a projection as to what the full pension would be worth at 65 if I carry on working another 25/30 years but I think I've seen a figure in the past that it would be worth about 27/28 grand if I could soldier on until I'm 65 or about 21/22k if I bail out at 5-10 years before that.
I doubt there will be a meaningful or non means tested state pension by the time I am old and grey.
Personally I think pensions only represent good value for money if your employer contributes a decent % or if you get a really good DB.
The tax advantages for people in higher rate tax band are also ok.
The rest of us, who pay into our own SIPP would probably be better with an ISA if contributing <20k a year.
I have started to ramp up my ISAs now rather than my SIPP as I am just not happy with the possibility the goal posts might move, probably just before I get to SIPP age.
The tax advantages for people in higher rate tax band are also ok.
The rest of us, who pay into our own SIPP would probably be better with an ISA if contributing <20k a year.
I have started to ramp up my ISAs now rather than my SIPP as I am just not happy with the possibility the goal posts might move, probably just before I get to SIPP age.
red_slr said:
Personally I think pensions only represent good value for money if your employer contributes a decent % or if you get a really good DB.
The tax advantages for people in higher rate tax band are also ok.
The rest of us, who pay into our own SIPP would probably be better with an ISA if contributing <20k a year.
I have started to ramp up my ISAs now rather than my SIPP as I am just not happy with the possibility the goal posts might move, probably just before I get to SIPP age.
Especially if you have an IFA that is eating % chunks of it.The tax advantages for people in higher rate tax band are also ok.
The rest of us, who pay into our own SIPP would probably be better with an ISA if contributing <20k a year.
I have started to ramp up my ISAs now rather than my SIPP as I am just not happy with the possibility the goal posts might move, probably just before I get to SIPP age.
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