Personal Pension

Re:Limits

After the 5th April 2006 the limit's going to be £225k contributions pa with a £1.5million ceiling on the pension fund. Well, we can all dream can't we ....

Re: Pensions

You should open a Stakeholder plan - there is definitely no sense in starting an EPP now with the changes that are coming next year.

You can put £3600 a year in even if you have no salary income. So you don't need to increase your salary. If you want to put more than that in, the limit is based on an age-related percentage of your salary (20% for me) and you can use the highest salary in any of the five previous years. I make my contributions based on my 2002/2003 salary because various factors meant I had a lot of earned income in that year. From next year there will be no limit at all on how much your company can put in. (Well £230,000 is the limit I think. If you were making the contributions personally for some reason then they would also be limited to the higher of £3600 or 100% of salary.)

You should get the company to make the contribution so you can avoid employers NI as well.

Re: Pensions

If married you could also pay £3600 for a non-earning wife.

Re: Pensions

The trouble with pensions is that any government can change the rules without much discussion. Look at Ballbag Brown and his tax raid on pensions.

Best option at the moment is a stake holder since their charges are capped and the Government contribute a top up. However if you wait till the SIPP come in, then stick your home in that.

Trouble is I don't think it'll be quite as easy as that.

Re: Pensions

If you are in the 40% tax band, you get relief on contributions at that rate...

Pensions

Speak to the specialists....there maybe other options but a lot depends on how much you're wanting to invest and how quickly you are wanting to move cash out of the company. The new regulations that come into effect next tax year will make schemes a lot more flexible, especially to those looking to invest large chunks of cash or even assets into pensions.

Have to admit to passing this type of work to IFA's due to the nature of the product.

Re: Pensions

But an Executive plan will cost you more than a stakeholder pension. So if you really only want to put in £300 a month get a stakeholder pension. And if an IFA recommends an Executive pension for this amount they are ripping you off to get the higher commision associated with these pensions.

Re:EPS

EPSs are quite expensive when a stakeholder will do. After 6th April 2006 you'll be able to put to a pension on a pound for pound basis anyway - £8500 salary = £8500 personal pension contribution possible.

Pensions

Yet again, Xog is correct.....directors can have an "Executive Pension Scheme" for which the rules are slightly different and %'s higher.

Best thing would be to speak to an IFA, your accountant should be able to give you a recommendation of the guys they use. Also, your accountant may receive a kick back from the IFA, if so ask him for a cut!

If you choose a stakeholder pension then I think you can pay in £3600 regardless of salary even if you are a director (that's what I do).

If you get your Ltd company to make the contributions directly then the "in order to pay more income tax which can then be reclaimed?" doesn't come into it.

There is a certain amount you can put in regardless of income but have vague recollection that that may not apply to directors. Generally the percentage depends on your age so think the answer may be yes, pension at 45% of salary sounds like a fifty something level.

For the latest rules and figures you would really be better looking on the inland revenue website, quite sure it's there somewhere. Or just ask some prospective pensions providers and they will be pleased to send you all the bumf for free.

Also consider other alternatives. Some personal pension probably good idea but not many seem to reccomend it as the sole provision.

AFIK I think you can put upto £3600pa into a pension fund no matter what you earn.

I want to put around £300 a month into a personal pension plan. Does anyone know if I should increase my salary (currently drawing 8K per anum from MyCo Ltd.) in order to pay more income tax which can then be reclaimed?

My accountant is not an IFA and is not legally allowed to tell me what to do...