Company retained profit in the long term

[DirtyDog]

Thanks NorthernLadUK.

Yes, thats in-line with what I thought, and thats the reason why the cash has been accumulating in the limited company account (have few savings accounts paying 1-2%, but its all too low anyways).

Am in the early 30s so pension does not appeal much to me at this stage. But will try to look at it in the coming days.

Based on my current limited knowledge about pensions, I think you can't take out any money till around 55, and at that stage also, you can only take 25% as a lump sum, and rest will have to be an annuity?
In that case, won't we lose the bet big time if we die shortly after 55?

Another reason why I haven't looked at pensions is that I am not sure whether I will retire in UK or not, and don't know about the rules regarding international transfers of pension contributions. If I shift out of UK permanently when I am around 40-45, will I still be able to access my UK pension when I retire (given that I have British passport/citizenship)?

Many thanks.

I used to think much the same (apart from not being early 30s). Then I spoke to someone who knew about investments etc.

I pay in £2k a month at the moment, but it's flexible so I can stop or start whenever I need to.

[Pegasus]

Thanks guys. Let me read up more about pensions.

In the meantime, does anyone have any idea about point 2 i.e. what happens if we shift abroad before retirement? Do we still get the UK pension?

[SueEllen]

Thanks SueEllen and NorthernLadUK.

Yes, I agree that pensions are very tax effective.

My primary concerns so far have been (1) the accessibility in case we need the money for any reason earlier,

You need the money when you are old. The majority of the people alive now and who post on this will live into their 80s.

You don't put all your spare money into the pension but some of it - spreading your risk.

(2) the complexity of international rules in case we shift outside UK in a few years and

If you move outside the UK your pension doesn't suddenly disappear the investments should (if you have chosen correctly) continue to grow even though you can't put money into it. Then once you reach retirement age you can draw on the pension.

(3) the potential of losing your contributions in case you don't live long enough.

NLUK has answered that for you.

[Contreras]

For each £100 contributed, your take home pay only reduces by £60. The tax man pays the rest!

Bargain!

... and then on retirement, for each £100 drawn as pension, you receive £60. The tax man keeps the rest!

Bummer!

[JoJoGabor]

You will only pay 40% income tax when you are retired if you take over the 40% threshold. Hopefully without a mortgage, a dual income of approx £80k will suffice for a couple of old codgers. There's only so many cruises and sweets for the grandkids you can buy. Then it will be more like 20% tax

[Fred Bloggs]

I think it's worth saying that regarding the many questions about how pensions work, places like Hargreaves Lansdown and others similar, have easy to understand guides freely downloadable that answer all the questions that have been asked here about how pensions work. I'm a huge fan of investing in SIPPs and I am maxing out my Ltd Co contributions to my SIPP at HL.

[SimonMac]

Thanks guys. Let me read up more about pensions.

In the meantime, does anyone have any idea about point 2 i.e. what happens if we shift abroad before retirement? Do we still get the UK pension?

Pensions are simple:

The money goes in tax free, but comes out taxed.

ISA's are the way round, you have already paid the tax on the money going in, so the money out is tax free

[Fred Bloggs]

Thanks guys. Let me read up more about pensions.

In the meantime, does anyone have any idea about point 2 i.e. what happens if we shift abroad before retirement? Do we still get the UK pension?

If you move abroad the pension will stay invested here in the UK. If you retire abroad you can still take a pension from your fund. There are ways to transfer pension funds to pension plans abroad but this is a specialist field where an adviser is required since there are pitfalls awaiting the unwary.