Pensions chat / poll šŸ§“

Financial Chat
92

A lot of my mates opted out of pensions due to the fact that ā€œthere will not be pensions when we are oldā€/nuclear war/cost of living.

As we get near that point, a lot are now working out what goes with pedigree chumā€¦

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93

Itā€™s also worth remembering that you can use some of your accumulated pot to buy an annuity and keep some of your pot for flexible drawdown. Doesnā€™t have to be either/or. There are pros and cons for each, and no one-size-fits-all solution.

Othe factors can affect annuity rates. My life insurance is heavily loaded for a chronic health condition at the moment - the flip side to that is that I should get better* annuity rates because they gamble on me dying younger. On the other hand Iā€™d like to leave something for the next generation and an annuity doesnā€™t do that.

  • Probably not 200% better though, which is the loading on my life insurance.
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94

Following on from my posts yesterday, this is the firm we are with. Probably limited appeal for the more typical younger Monzo demographic to have a joint or multi-party SIPP wrapper but may appeal to some in established relationships closer to retirement.

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95

I do like the principle of a family SIPP. At present weā€™ve four separate albeit managed more or less as one.

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96

Itā€™s often difficult to know what to prioritise, especially with current state of housing in the UK. Iā€™d personally put saving for a property at a much high priority than a pensions, and if you live somewhere expensive like London, that can mean saving for many years before you really start to even think about pensions. But then saving lots towards your pension in early years, really makes a huge difference, with compounding and investment growth, rather than saving lots in your final years. So who really knows whatā€™s bestā€¦

97

My employer pays 6%. I decided to speak to a pensions advisor as whilst interested in finance/banking, Iā€™m no expert. Best monies Iā€™ve spent, as they explained in laymanā€™s terms, whatā€™s not performing well and what is. Helped ditch my employers poor performing fund for a better one and helped me open a new one. They even projected my retirement salary and Iā€™m happy with the forecast (I know it might not happen).

99

What private pensions do the Govt top up by 2%?

101

They donā€™t top up any by 2% what they do is top-up your contributions by 25%. So in your case that 5% becomes 6.25%.

Nest isnā€™t great.

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102

If youā€™re in a union, they generally give you a free hourā€™s consultation with a financial advisor. Also free will, which everyone should have.

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104

You can run your pension much the same as an ISA these days. Iā€™ve mine with AJ Bell and thereā€™s really not much difference between their SIPP (pension) and their ISA.

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105

I have looked into a sipp with them but it just seems a hassle to claim back the tax. My employer pension is changing their funds next month so I may see how that goes first.

106

Itā€™s really not. You donā€™t need to fill in a self assessment. I just send HMRC a letter at the end of each tax year with my SIPP contributions and gift aid donations and a few weeks later they pay the money back into my bank account. The first time, I even got Chat GPT to write the letter for me.

I do wonder though how many higher and additional rate taxpayers have no idea that theyā€™re due money back from pension contributions made outside of salary sacrifice.

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108

You donā€™t claim back the tax, they do. It just appears in your account several weeks later.

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109

they only claim back the first 20% automatically.

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110

Our default employer contribution is 10%. If you put in an extra 2% they match it - so a 12% employer contribution in total. They also give you half of the employer national insurance savings they make if you salary sacrifice into your pension. So that means you get an extra Ā£69 for every Ā£1000 you contribute yourself.

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111

Good point. Iā€™d forgotten about that. Not difficult though.

112

still more difficult than just doing employer pension via salary sacrifice which takes no effort at all.

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113

Marginally if you have to do a tax return anyway.

114

Look at where you are with state pension, you need to have paid up years for this. You can pay retrospectively for 5 years. State pension is not much, but is around Ā£10K pa. 5% return on Ā£60K pot gives you Ā£3K a year

115

Single most important bit of pension planning you can do. Up until 2025, you can top-up years back to, I think, 2006.

Costs about Ā£800 per year that you buy. You get that back in about three years once you collect the pension and youā€™re in profit from then on.

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