Pension legislation risk
Discussion
We have many topics on here about the tax advantages of paying in to a pension. One thing not mentioned so much and something I worry about is governments dicking about with the rules/ages etc even for SIPPs
Does anyone have any strategies for inside / outside pension investment ratios etc?
Personally, I’m 34, I have been paying a healthy amount from my ltd company to my pension, but obviously retirement is a fair while off. I’m trying to decide weather to take a bit of a tax hit to get some more “not pension” investments
Does anyone have any strategies for inside / outside pension investment ratios etc?
Personally, I’m 34, I have been paying a healthy amount from my ltd company to my pension, but obviously retirement is a fair while off. I’m trying to decide weather to take a bit of a tax hit to get some more “not pension” investments
If you want to retire sooner than the government rules (currently 55 for me when I can access SIPP) then you need to figure out another way to cover the years different. To retire at 50, I need 5 years of savings, or income from property etc.
So yeah, I have a stocks n shares ISA as a backup. With a potential to hide £40k in pension and £20k in ISA thats plenty of options for spare cash. Up to you how you split it, I think preference may change with age, as you get closer to 50, 55 then locking it up for a few years in pension is preferred for the tax relief.
I have friends who have done it with property, but that was some time ago when they got into it and its getting less and less attractive. Property is great as always if you have cash you want to generate income from, but not so easy to start from scratch, leverage up and make a good yield from.
So yeah, I have a stocks n shares ISA as a backup. With a potential to hide £40k in pension and £20k in ISA thats plenty of options for spare cash. Up to you how you split it, I think preference may change with age, as you get closer to 50, 55 then locking it up for a few years in pension is preferred for the tax relief.
I have friends who have done it with property, but that was some time ago when they got into it and its getting less and less attractive. Property is great as always if you have cash you want to generate income from, but not so easy to start from scratch, leverage up and make a good yield from.
I'm with bogie on the S&S ISA route. Also remember you have an annual CGT allowance for unwrapped investments (though may have some income tax to pay on dividends).
As for the ratio between each, that is where financial planning (not to be confused with financial advice) comes in.
You need to work out how many years there will be from when you want to retire and when you can access your pension/SIPP. You then need to ensure you are putting sufficient money into your ISA to cover this gap.
Remember ISA income/withdrawals are completely tax free, so the figure for this will be lower each year than for your pension withdrawals.
As for the ratio between each, that is where financial planning (not to be confused with financial advice) comes in.
You need to work out how many years there will be from when you want to retire and when you can access your pension/SIPP. You then need to ensure you are putting sufficient money into your ISA to cover this gap.
Remember ISA income/withdrawals are completely tax free, so the figure for this will be lower each year than for your pension withdrawals.
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