Personal Pension

[Hoddo]

Next week I shall change jobs, the new employer does not offer a pension scheme where they contribute. I am aware they will have to offer a contribution by summer 2015 following the workplace pension reforms, however between now and then I want to know what my options are to continue with my pension/retirement provisions. I am not well versed in this field, what options do I have?

- Individual pension where the only contribution comes from me?
- Well balanced investment(s) - funds, stocks etc
- ....other options.

[skahigh]

Are you part of a pension scheme through your current employer?

I've just broken my pension pot off from my previous employer and am paying in to it independently.

[Kudos]

So you pay higher rate tax?

If not, and based on employer not paying, I'd steer clear of pensions.

An ISA perhaps, btl property. Only you'll know what to invest in based on attitude to risk

[CountZero23]

It depends on your current situation, if you have an existing pension scheme which is portable then potentially keep paying into that. In most cases this would be the safest course of action.

Your employer may be liable for providing a pension earlier than 2015 depending on their size.
http://www.thepensionsregulator.gov.uk/employers/s...

Regarding automatic enrollment your employer will be required to pay and pension and arrange one for you you automatically. However you may fair better by choosing your own pension scheme rather than letting them choose for you.

I would suggest either continuing paying into an existing scheme if you have one or starting a new pension with a risk level you are happy with. When your employer becomes required to start paying in then get them to pay it into your existing scheme.

Makes no sense having lots of small pension pots lying around - better (most of the time) to just have one.

Regarding 'Well balanced investment(s) - funds, stocks etc', you can find pensions which are linked to pretty much any area of the stock market or financial sector.

If for example you wanted to invest in property then instead of a buy to let investment find a pension scheme linked to the property market. This way you pay no tax on your investment (saving you potentially 50% / meaning you can double the size of your investment) and you don'd have the hassle of running a property.

Financially it makes sense to put all you're investments into your pension due to the tax efficiency - as long as you don't mind not having access until you retire.

On that note beware pension liberation schemes, DO NOT TOUCH THEM WITH A BARGE POLE. In some cases after the fee's they change and the inevitable tax bill which comes up afterwards you can actually end up in debt.

http://www.thepensionsregulator.gov.uk/regulate-an...

Edited by CountZero23 on Saturday 1st June 13:13

[Hoddo]

Apologies for the delay.

skahigh said:

Are you part of a pension scheme through your current employer?

I was part of a scheme with my previous employer. Paid into it for the last 8 years.

skahigh said:

I've just broken my pension pot off from my previous employer and am paying in to it independently.

My previous pension supplier has been in contact and said I can do that should I wish. Need to explore if this is a wise thing to do as I am not benefiting from employer contributions in the new role (as I was previously) so have to explore if my payments could be set to work better for me elsewhere.

Kudos said:

So you pay higher rate tax?

Yes

Kudos said:

If not, and based on employer not paying, I'd steer clear of pensions.

An ISA perhaps, btl property. Only you'll know what to invest in based on attitude to risk

Fair point and one which I had considered. I need to sit down and explore the options in greater detail.

CountZero23 said:

I would suggest either continuing paying into an existing scheme if you have one or starting a new pension with a risk level you are happy with. When your employer becomes required to start paying in then get them to pay it into your existing scheme.

So I can dictate this to them when their scheme starts? I was not aware I could do this.

CountZero23 said:

Regarding 'Well balanced investment(s) - funds, stocks etc', you can find pensions which are linked to pretty much any area of the stock market or financial sector.

If for example you wanted to invest in property then instead of a buy to let investment find a pension scheme linked to the property market. This way you pay no tax on your investment (saving you potentially 50% / meaning you can double the size of your investment) and you don'd have the hassle of running a property.

Financially it makes sense to put all you're investments into your pension due to the tax efficiency - as long as you don't mind not having access until you retire.

Definitely an area I shall explore further. Thank you.

Edited by Hoddo on Thursday 4th July 10:11

[Eric Mc]

If you are a higher rate taxpayer, make sure you are obtaining tax relief on the contributions you personally are making into the pension at the higher tax rate. Many people overlook this and miss out on this tax relief.

Do you complete Self Assessment tax returns?

If you have missed out on this relief in previous years, you can make a back claim for up to three years.

[Hoddo]

Eric Mc said:

If you are a higher rate taxpayer, make sure you are obtaining tax relief on the contributions you personally are making into the pension at the higher tax rate. Many people overlook this and miss out on this tax relief.

Do you complete Self Assessment tax returns?

Thank you. Been paying higher rate for the last few years so this would apply to me. Have not completed a Self Assessment before can I do this now or do I need to wait and submit it at year end?

Eric Mc said:

If you have missed out on this relief in previous years, you can make a back claim for up to three years.

How?

Thank you.

[Eric Mc]

Hoddo said:

How?

Thank you.

Apply to HMRC complete self assessment tax returns for the relevant years. At this point in time you could complete the following returns -

2010/11
2011/12
2012/13

Just phone up HMRC and tell them you want to complete SA returns for the years mentioned. They may faff about trying to convince you that you don't need to - but insist that you WANT to. The onus for deciding who completes a tax return is LEGALLY the taxpayer's anyway.

[Eric Mc]

YHM