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My company has a flexible benefits package and I can choose how much to contribute to my pension which is handled by salary sacrifice. What is the benefit to me over paying money to another provider - would be an H-L SIPP? I save on some NI but that's only 1% at the top level right?
Check details, if you sacrifice then you and your employer should be paying less NI (so where is the employer money going).
Re 'another provider' - 'eggs, baskets'.
e.g Company A
- invest X, make 1% as it's a crap fund, pay 1.5% manangement charges, how much profit is that. Do you know what your current fund is making, charging etc.
- invest X (Emerging mkt. nat res ??? gamble) make 20%, pay 1.75% management charges, how much profit is that.
In my experience people get commision on the sale NOT the ongoing performance so YOU have to do the monitoring.
My company's scheme is with Scottish Widows and I choose my own funds so is the same on that front as the H-L SIPP. I have a feeling, but need to check, that the Scottish Widows' scheme has a 1% annual charge whereas the H-L SIPP has none - I assume they both keep the annual commissions from the funds.
I do need to see how much (if any) of my employer's NI gets added to the pension. Another consideration is that as a 40% tax payer I'd have to wait to get the higher rate of tax back from the taxman if using the SIPP whereas this tax obviously goes straight into my employer's scheme.
Pension counts are before ANY deductions (Employer Ni, employee NI, tax) - so check amounts - yep can claim tax back if higher rate (but suspect gorgon is working on it)
re H&L I suspect that H&L mght not charge but that the funds they use will.
SW have limited funds (as part of my pot is with them).
I'm surprised anyone trusts pension funds after recent events.
Invest your money yourself - at least it won't get stolen by your funds manager.
Yeah, spend all your money ASAP before some grabbing bastard nicks it 🙁 Pensions are a form of gambling relying on the dubious honesty of various wide boys and politicians
epicyclo - the pension options I mention are invested by myself just in a pension wrapper; I suggest you might want to investigate as sounds like you want to do the same sort of thing:
http://www.h-l.co.uk/pensions/SIPP
you can get your higher rate tax relief through your SIPP if you phone your tax district and tell them what you're paying in-year. They'll adjust your tax code and increase your net pay so you don't need to faff around at the year end.
I do a combination of a SIPP (to give me control over funds- with Sippdealextra, which has low charges) and my work scheme, so I get their contributions and part of the NI savings they make through salary sacrafice. I'm assuming your income isn't over the new £150k cap - if it is, you're limited really to £20k a year.
That's interesting - so are you saying that there are codes that reduce the 40% band?
I think staying with my company's scheme has got to be the best option as it seems to be that it has all the advantages of a private SIPP along with the salary sacrifice benefits though they might be small. H-L's annual charges are definitely lower so probably worth transfering it over at some point.
Pensions are a form of gambling relying on the dubious honesty of various wide boys and politicians
Yes, simon - people trying to put something aside for their old age so they don't have to rely on a tiny state pension is a bad thing.
mudshark - Member
epicyclo - the pension options I mention are invested by myself just in a pension wrapper; I suggest you might want to investigate as sounds like you want to do the same sort of thing:
No, all those sorts of things are a way of tying you up. Then you are powerless when the govt changes the rules.
My scepticism saved me big time in Oz. The hot thing about 30 years ago was family trusts and other schemes. Once there was loads of money rolling around in them the govt saw a honey pot and changed the taxation and admin rules, so they became white elephants compared to a self directed approach using normal markets and paying normal tax.
The best analogy I can come up with is to invest your money increasing your crop instead of building large walls around the field.
You need to have the discipline not to spend your gains on toys or status crap though.
all valid points, but the benefits of pension contributions for higher rate tax payers is high, particularly if their income in retirement will be in the basic rate bands.
I went for a SIPP as it gives me complete control of where my money goes - if it does badly, its my fault! Sure, you're always going to be at the whim of govt policy on it all, so that's why all your eggs shouldn't be in the formal pensions basket. All a pension is is a savings vehicle for retirement, whether its a formal pension, ISA or even a buy to let (?!).
Yes, simon - people trying to put something aside for their old age so they don't have to rely on a tiny state pension is a bad thing
I didn't say that - I'm merely pointing out that any pile of money is likely to be a target for theft, and the bigger the pile, the more attractive it becomes. Also with the demographic shift the most obvious way to correct the burden of pensions on future workers is to inflate their value to zero - which doesn't affect those in work to the same extent.