Saving/Retirement etc

[psychocandy]

Before anyone has a dig, yes, I've done some research on this and yes, I know there are loads of posts about SIPPs etc on here.

However, a few things....

1. If I pay into a SIPP personally, the max I can put in each year = the salary I pay myself? If company does it the max is £50K? (and I can use previous 3 years allowances too).

2. If I transfer in some existing frozen pensions, does this count towards the £50K year max?

3. Am I right in saying that you can start taking money out of SIPP as soon as you reach 55? Regardless of your work circumstances?

4. Savings etc. In terms of savings, I'm guessing you should always maximise your ISA allowance every year? However, by taking money as divi rather than bunging into a SIPP, your paying 20% CT on this now though arent you? (Obvious advantage being that money in the ISA is immediately available).

[jmo21]

As you can see, there a lot of permutations that will be dependent on your circumstances.

For what it's worth, I always max out my ISA allowance and am currently paying £750 Ltd company contribs to my SIPP.

I am currently overpaying my mortgage by almost 4 times the expected payment with a view to getting rid of the mortgage in approx 6 years (assuming we don't move of course!).

The rest goes into savings.

Locking away £750 a month in a pension might be way too much for some people, some may be paying way more than that because of their circumstances.

Some people don't like pensions and won't use them at all.

[psychocandy]

As you can see, there a lot of permutations that will be dependent on your circumstances.

For what it's worth, I always max out my ISA allowance and am currently paying £750 Ltd company contribs to my SIPP.

I am currently overpaying my mortgage by almost 4 times the expected payment with a view to getting rid of the mortgage in approx 6 years (assuming we don't move of course!).

The rest goes into savings.

Locking away £750 a month in a pension might be way too much for some people, some may be paying way more than that because of their circumstances.

Some people don't like pensions and won't use them at all.

Yeh. Forgot about the mortgage idea too.

So basically choices are :-

Pay CT on divi and bung in savings/ISA
Pay CT and pay off mortgage with it
Pay it straight into SIPP

[Rabotnik]

As you can see, there a lot of permutations that will be dependent on your circumstances.

For what it's worth, I always max out my ISA allowance and am currently paying £750 Ltd company contribs to my SIPP.

I am currently overpaying my mortgage by almost 4 times the expected payment with a view to getting rid of the mortgage in approx 6 years (assuming we don't move of course!).

The rest goes into savings.

Locking away £750 a month in a pension might be way too much for some people, some may be paying way more than that because of their circumstances.

Some people don't like pensions and won't use them at all.

Can I ask, if you want to pay off your mortgage soon, why do you put £9000pa into a SIPP? Why don't you put it towards the mortgage? Just asking since I'm planning on putting all the money I can into the mortgage and putting off pension contributions till that is gone.

[psychocandy]

Can I ask, if you want to pay off your mortgage soon, why do you put £9000pa into a SIPP? Why don't you put it towards the mortgage? Just asking since I'm planning on putting all the money I can into the mortgage and putting off pension contributions till that is gone.

Money used to pay off mortgage comes from divis that have been taxed at 20% whereas money going into SIPP is tax free (saving the 20%)?

Potential return on SIPP is more than saved on mortgage interest payments ?

[northernladuk]

Potential return on SIPP is more than saved on mortgage interest payments ?

Question is what will SIPP be worth in the end? They have had a bad rap recently so it is up to you to invest in the one you are most comfortable with. Morgage my not be the best option financially as we don't know where the house prices are going but at least you own your own home which is a much nicer feeling than having a mortgage and a quetionable investment.

[psychocandy]

Question is what will SIPP be worth in the end? They have had a bad rap recently so it is up to you to invest in the one you are most comfortable with. Morgage my not be the best option financially as we don't know where the house prices are going but at least you own your own home which is a much nicer feeling than having a mortgage and a quetionable investment.

This is true. I was pointing out though that contributions to a SIPP save the 20% of CT.

Of course, no good at all if the SIPP provides a 20% worse return than your mortgage payments saving.

[jmo21]

Can I ask, if you want to pay off your mortgage soon, why do you put £9000pa into a SIPP? Why don't you put it towards the mortgage? Just asking since I'm planning on putting all the money I can into the mortgage and putting off pension contributions till that is gone.

You're right, I've simply chosen to do both is all.

SIPP payments from my company also reduce my CT bill.

The longer you pay into your pension, the more time it has for compound interest and smoothing over the rough bumps of the funds it invests in (hopefully). Also our mortgage interest rate is actually quite low, and paying ~4 times the monthly repayment seems a lot to me already :-)

We review where we are every year though, so haven't thought too much about for last 6 months or so.

[jmo21]

Pay CT on divi and bung in savings/ISA

You don't pay Corp Tax on divs.

<NLUK>
What did I tell you about reading those links over there ----------------------->>>>>>>>
</NLUK>

[Rabotnik]

You're right, I've simply chosen to do both is all.

SIPP payments from my company also reduce my CT bill.

The longer you pay into your pension, the more time it has for compound interest and smoothing over the rough bumps of the funds it invests in (hopefully). Also our mortgage interest rate is actually quite low, and paying ~4 times the monthly repayment seems a lot to me already :-)

We review where we are every year though, so haven't thought too much about for last 6 months or so.

I see, cheers mate. I haven't done any calculations myself, but I just thought that mortgage interest is a huge waste of money, so I wanted to reduce the capital ASAP. With interest rates where they are at the moment, my instinct is that the reduction in interest will exceed the interest earned on any investment available at the moment. I have my ISA maxed and a 3% savings account and I used to put the max into my pension when permie, but now I really want to own our flat (fortunately 20% of it is an equity loan, so dropping property prices is actually great for us since the repayable amount goes down).