How much do you put in your pension?

[IR35 Avoider]

Never bothered with pensions because you need a huge amount just to get £25,000 a year at retirement; annuity rates suck and I doubt they'll achieve the oft touted 6% return.

You don't have to buy an annuity. You can invest your pension money in almost any of the same places that you would put non-pension money. (The one big exception I can think of is buy-to-let.) You can withdraw it as and when you see fit, once you are over 55.

When you die, a % of your pot passes to the spouse but after she's gone then it's all gone.

I suppose you are talking about an annuity. If you don't buy one, your pension pot can be left to anyone you like, tax-free if you kick the bucket before 75, otherwise taxed at their marginal rate when they withdraw the money. (They don't have to take the money out immediately, they literally inherit the pension, so can operate it as their own pension account. But don't have to wait until 55 to take the money, I think.)

The money passed on is also outside of your estate and so is not subject to inheritance tax.

[IR35 Avoider]

To answer the OP question, I've average 39K a year into my pension over the last ten years. Just posted my last ever contribution cheque today. In order to avoid the decrease in allowance from 1.25million to 1 million in April I will have to stop making contributions.

(I have far less than 1 million, but if I spend other savings first, leaving the pot to grow, my pot could grow to more than that.)

[ChimpMaster]

A single property bringing in £7k/month? Is that a commerical or residential?

No, multiple residential.

Commercial isn't my scene, but if you have a big pension pot then it's well worth considering.

[ChimpMaster]

You don't have to buy an annuity. You can invest your pension money in almost any of the same places that you would put non-pension money. (The one big exception I can think of is buy-to-let.) You can withdraw it as and when you see fit, once you are over 55.

I suppose you are talking about an annuity. If you don't buy one, your pension pot can be left to anyone you like, tax-free if you kick the bucket before 75, otherwise taxed at their marginal rate when they withdraw the money. (They don't have to take the money out immediately, they literally inherit the pension, so can operate it as their own pension account. But don't have to wait until 55 to take the money, I think.)

The money passed on is also outside of your estate and so is not subject to inheritance tax.

Kudos, you know a lot more than me on the pension side. I wish I had learned more and invested at least something reasonable into pensions when I was younger, but now in my mid 40s I don't see it as worthwhile. If I was 25, I would certainly put a decent sum into a pension each month, but only after living a lot and then investing some in property.

I won't complain though. My 'retirement' portfolio is already cash-positive each month and hopefully will grow further as time marches on. I do worry that it's all in property, but hey-ho I am where I am. It's only money after all, and it's all fake anyway as global central banks have proven to us

My best friend recently 'retired' at 41 after running a solid off-license business and a couple of sideline businesses for 15 years. He's just ordered a brand new £70k Range Rover and has around £5k income a month from leases etc. He also gave me that line about not being the richest man in the graveyard, though it's great to see him enjoy his hard-earned at such a good age.

[Michael at BI Accountancy]

My best friend recently 'retired' at 41

Hat's off to him...41...one can only dream!

[IR35 Avoider]

In fairness, many of the good features I've mentioned were only introduced recently. The tax-relief and IR35-immunity of pension contributions were enough of an attraction for me, the rule changes with regard to annuities and inheriting pensions were just an unexpected bonus.

[IR35 Avoider]

75% of my contributions were made after the age of 45...

I would have thought the closer to 55 the more attractive contributing is, as you only have a short time to wait until you can get the money back. To give an extreme example, you could contribute 40K in your 54th year and take it all out the following year. (This does assume you are still working at 54 though, which might not be part of your plan.)

(The point of this would be that money going in would get tax relief at 38% or (I think) 47%, that coming out would be taxed at 15%. This is assuming the alternative to pension was salary, which may not be the case if taking dividends.)

[DallasDad]

Never bothered with pensions because you need a huge amount just to get £25,000 a year at retirement; annuity rates suck and I doubt they'll achieve the oft touted 6% return.

Worse if the nice Mr IFA then takes his 3-4% cut!

You can only buy commercial property in pensions.

And land, Farm land or Brown field sites and if you can then get outline PP on them that can be a pretty good roi.

[jamesbrown]

Hat's off to him...41...one can only dream!

Perhaps I like what I do too much... or lack imagination , but I really can't see the motivation to retire at 41.

[Fred Bloggs]

In fairness, many of the good features I've mentioned were only introduced recently. The tax-relief and IR35-immunity of pension contributions were enough of an attraction for me, the rule changes with regard to annuities and inheriting pensions were just an unexpected bonus.

Excellent thinking I reckon!