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Where do you stand on paying savings into a pension?

Posted: Mon Oct 07, 2019 5:25 pm
by expressman33
https://www.moneyobserver.com/ask-money ... m_content=

If you have started drawing a defined benefit pension then generally, you are allowed to pay contributions of the higher of your ‘net relevant earnings’ or £3,600 into a pension, and qualify for tax relief. So even if an individual has no net relevant earnings, they can pay pension contributions inclusive of tax relief of up to £3,600, which for a basic-rate taxpayer means a ‘net’ contribution of £2,880.

Re: Where do you stand on paying savings into a pension?

Posted: Mon Oct 07, 2019 7:30 pm
by parchedpeas
There are rules against recycling money in this way, but I'm not sure they are ever enforced, certainly not at the lower levels you mention.

Re: Where do you stand on paying savings into a pension?

Posted: Mon Oct 07, 2019 9:47 pm
by planteria
if the money is not needed, then it makes sense to invest it into the pension and to gain the tax relief - if it's deemed 'ok' by your advisors.

Re: Where do you stand on paying savings into a pension?

Posted: Thu Oct 17, 2019 7:43 am
by oldboy
Looking at the best pay out on pensions as of Sat 12th Oct if you take at 60, 65, or 70 the pay out based on £50k = 3.8%, 4.55%, or 5.26% respectively. Theses pay back look good when you think about the best bank account interest rates, however when you consider you start making money at the ages of 83, 86, and 89, but the average age of death in the UK is 81 (male 79, female 82, both rounded),you've got to ask yourself who's making money here?

Re: Where do you stand on paying savings into a pension?

Posted: Thu Oct 17, 2019 9:08 am
by Boro Boy
oldboy wrote:
Thu Oct 17, 2019 7:43 am
Looking at the best pay out on pensions as of Sat 12th Oct if you take at 60, 65, or 70 the pay out based on £50k = 3.8%, 4.55%, or 5.26% respectively. Theses pay back look good when you think about the best bank account interest rates, however when you consider you start making money at the ages of 83, 86, and 89, but the average age of death in the UK is 81 (male 79, female 82, both rounded),you've got to ask yourself who's making money here?
Or: Pension Drawdown - leave the pot invested and still take an income...

Re: Where do you stand on paying savings into a pension?

Posted: Thu Oct 17, 2019 10:57 am
by expressman33
Also if you are a couple look if you can make use of the Marriage Allowance https://www.gov.uk/marriage-allowance

Re: Where do you stand on paying savings into a pension?

Posted: Thu Oct 17, 2019 8:23 pm
by oldboy
Ok chaps these are reasonable solutions, but I'm not rich, so here's my problems,

Using marriage tax allowance, there's no tax payable until you have reached your £12,500 tax free limit. To get to this point at the above paybacks you have to have a pension pot of between £237,642 and £328,947, that means over 54 years I'd have had to be getting roughly £4,400 into my pension pot each. on an average wage that'd be 18% of a pay packet before tax etc. didn't happen and not going to get there.

Regarding Drawdown, great idea, but you have to be able to balance your drawdown with the actual increase in growth in your investment plus expenses, otherwise you can use your pot up, and then you're beggared, and if the markets have a bad year you can blow your investments good and proper.
The idea of drawdown was for one offs, not as a solution to increase annual payout of pensions.