Ten Million Workers to Pay More Pension Contributions

#22
That's an option, but as you'd have been paying in to it, there would be significant legal challenges, hence why I suspect a buy out would be the final outcome.
No disagreement from me on the legal challenges. Remember there was also legal challenges on the forced change of Military pensions from RPI to CPI, Government won that battle.

Something will definitely change. A buy out might be too scary an upfront amount for the Government.
 

Gout Man

LE
Book Reviewer
#23

Wordsmith

LE
Book Reviewer
#24
Nope.

You'll get tax relief on your own contributions at the rate of tax you pay, which could be higher or even additional rate.

When you draw your pension, you can take a chunk of it tax free, and whatever is left will bear tax at the rate then appropriate, but you will not have to pay NICs.

Although employee contributions are increasing for most auto enrolment schemes, the employer contribution will also rise.

I've discussed this issue in FT Adviser, because I'm ace.
My company has a free pensions advisory service, which I've been taking advantage of. Some points from that:
  1. Never take more than the 25% tax free lump sum from your pension when your working. If you do so, you'll restrict the amount you can put tax free into a pension pot to just £4K a year.
  2. Never talk about recycling the tax free lump sum into another pension pot because HMRC will have a sense of humour failure. The correct form of words is "I now have additional income from some investments, so please put more of my wages into my pension pot as an AVC".
  3. Check carefully into the fine print of each pension pot you have, and if necessary move it into a better scheme.
  4. To get £1K of annual income from a pension pot (annuity), you'll need to put £25K into that pension pot. Even £250K in a pension pot will only give you an annual income of £10K.
  5. Treat the state pension as living costs only. It'll pay for food, clothing and utility bills. If you want to do things like go down the pub or away on holiday, you'll need a private pension.
  6. Start putting away as much money as you can afford - even putting £250K into a pension pot takes a good few years.
  7. Putting money into a pension pot lets you avoid tax and NI on the money you put in. Putting £1,000 into a pension pot doesn't reduce your take home by that much.
Wordsmith
 
#25
With workplace pensions, is it true that you can stop your contributions temporarily but if you start paying in again in later years, your employer is under no obligation to pay into the scheme themselves if you rejoin

Or have people been misreading the rules and getting confused ?
 
#26
there are a couple of tax experts here, can they answer one question please, got 2 workplace pensions due to changing jobs, how much hassle (or is it just possible ) is it to combine them, at the moment only paying in to the current pension but both are going to be charging fees, seems stupid paying both
 
#27
With workplace pensions, is it true that you can stop your contributions temporarily but if you start paying in again in later years, your employer is under no obligation to pay into the scheme themselves if you rejoin

Or have people been misreading the rules and getting confused ?
Yes.
But you'll be automatically re-enrolled at the three year anniversary of the scheme. A safeguard put in place to stop naughty employers conning people into leaving the scheme.
 
#28
there are a couple of tax experts here, can they answer one question please, got 2 workplace pensions due to changing jobs, how much hassle (or is it just possible ) is it to combine them, at the moment only paying in to the current pension but both are going to be charging fees, seems stupid paying both
The fees are usually a straight percentage. As such, you're not going to be paying more and, speaking as an IFA, its a PITA to amalgamate small funds.
Not worth the effort until you're near retirement.
 

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