Pension

Is it worth dumping money into a pension as a tax saving measure or will the tax ultimately be paid at the end. My only reservation of money in a pension is it tied up. How likely is it that the tax allowance on pensions will be reduced in future
 

farmerm

Member
Location
Shropshire
Yes and no... as I understand it I don't think pension contributions actually reduces your tax bill in any way... but you can in effect claim back the tax paid on the amount contributed and add this to your pension fund.

https://www.moneysavingexpert.com/savings/discount-pensions/

Someone will correct me if I am wrong. What I think happens is when you pay into a pension the government also add money equivalent to 20% of your contribution, ie you pay in £100 your fund grows by £120. If you are a higher rate tax payers you can claim a further 20 or 25% so your £100 contribution grows your pension fund by £140 or £145. For every £1000 your earn as a higher rate tax payer you keep £600 and loose the rest to tax. However if you take that £600 and add it to your pension fund your fund grows by £1000.. so what is better for you personally, £600 in the bank of £1000 in your pension fund... its your call.
 

MickW

Member
Location
South West
We opened company pensions (Ltd Co) in an effort to reduce our tax which it did those years (not huge amounts) but now I’m getting ready to claim I’ll pay back tax on all bare 25% and the pensions are pretty useless. I’m looking at juggling the money timing which might keep the tax down a little.
In hindsight we should have invested the money in property or Folk 2 Folk saving or something similar. I’m sure those with knowledge would have a different view possible bias to the commissions.
 
If you pay money into a pension then it will be topped up by the basic tax rate at the time of investment by the pension provider. If you are a higher rate tax payer then you will be able to claim the additional amount back at the end of the tax year. This makes it very efficient as a way of investing especially if you are looking at the long term and have your pension in stocks and shares.

Remember though that the income must come from employment or self employment and not from property or investments.
 
You can put a lot of money away each year tax free with a Cash ISA or Stocks & Shares ISA. This is tax free but then again you will have probably had to pay tax on the money you invest. Pensions are tax efficient so worth considering. Why not do 50% pension and 50% ISA. At least with the ISA you can take it out at any time and the good thing with the pension is that you can't spend it before you retire!
 

Chickcatcher

Member
Location
SG9 0RG
@marshbarn I dont think that is quite right but in the end Hmrc will certainly get most, as I say in the end.
I am of the understanding that if one dosen't make there 75th birthday and your pension fund has not been touched your benificeries receive gross fund tax free.(or thats my plan till I get to 74 and 364 days)
 

capfits

Member
You would need a fund of circa £300000 to pay tax after your retirement if you retired today. (£12500)
Assuming no growth (a possibility) this could be achieved as a basic rate tax payer with £240000. A few other things to think about like how much you can actually get tax back on per year
Looks a no brainer to me if you can put the money aside. Even borrow the money in few years before retirement?
 
I started paying into a private pension 30 yrs ago at 19 with £10 a month, I was always advised and still am that a regular monthly amount increased throughout ones working life will create a tidy pension pot at retirement
Do you read your annual pension statement?
I started about the same time with £40 a month, that was altered after a few years when the tax rules changed to something like £36 a month plus the tax relief, keeping the overall input the same.
Last time I had my pension statement my fund would buy me a pension of something like £800 a year, which is next to bugger all.
Everyone’s opinion of what a decent pension income would be will vary but I reckon I’d need to have been paying in at least £800 a month to get a decent but modest pension to live on of £16,000 a year according to their figures.
 

egbert

Member
Put some money into a pension but don't go in too deep. spread it about you don't know what the future will bring. Don't forget the pension advisors are very good at looking after themselves.
I always ask financial advisers (or quietly ask myself) why, if they know so much about investing, aren't they kicking back on a tropical beach, with a pair of dusky maidens waiting on their every need? Instead, they are chasing round the countryside in a tin box and a cheap suit, struggling to bedazzle the likes of me.
 

icanshootwell

Member
Location
Ross-on-wye
I remember starting mine at 21, a con man came around with his book of predictions, invest just £50 month and your be getting anything from 250,000 lump sum when you retire, depending on inflation he said.:cautious: Well i am now 50 and to date its value is around 35k.:( I decided to freeze mine and stopped paying into it, its still growing just slower than it was before, luckily i invested in property that will give me a decent return on investment in my retirement. Pensions should come with a gov health warning, be prepared to be disappointed and have a plan B.
 

Bloders

Member
Location
Ruabon
As long as it is growing, then it is a savings fund?
You put money in ang save tax on that, so if you are a tax payer, you get something back then.
when you get to 55, you can tak a lump sump tax free, and then if you wish, take the rest and pay income tax on it at the appropriate rate.

Some days i regret not putting more in, and some days im glad i didnt - so maybe i am satisfied with what i did!
I paid my mrtgage off early, i bought a couple of houses, and now, as a higher rate tax payer, i pay a lot per month ino a pension fund, with the aim that in 10 years time, i can start taking it back out.
 

Get ready for pest monitoring, advises PGRO

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Written by Charlotte Cunningham

The Processors and Growers Research Organisation (PGRO) has issued new advice to help growers understand the importance of measuring pest populations before any decisions are made on insecticides. Charlotte Cunningham reports. Ahead of the trapping season, the PGRO has produced a new masterclass video to help growers understand how to trap and assess pest populations. The key advice is that using a range of preventative tools will be crucial for farmers looking to reduce cases of pea and bean weevil, pea moth, and silver Y moth this spring, while finding more sustainable ways of farming in line with new agricultural policy, according to the PGRO’s research and...
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