Reply to: Pension.

[DeludedAussie]

But at 20 I earned half of what I earned at 30, which was half of what I earned at 40.

The fact is anything that you save at age 20 will be worth nothing by the time you're 65. There's little wonder that a lot of people treated property as a pension.

Its inflation And CPI is just so wrong dont get me started

Inflation is running at around 8%

[escapeUK]

If you start your pension at 20 then its 10%, at 40 its 20%. Makes a good case for starting your pension as early as possible.
.

But at 20 I earned half of what I earned at 30, which was half of what I earned at 40.

The fact is anything that you save at age 20 will be worth nothing by the time you're 65. There's little wonder that a lot of people treated property as a pension.

[IR35 Avoider]

There are two ways to make pension contributions, as a regular monthly amount or as single contributions. The latter is better for contractors. You can pay whenever you want, in any amount that may suit you at the time. As someone with a variable income stream you will want vary your payments according to whether you have income and how much, and also so you can fine-tune your tax planning.

Regular monthly contributions are for ordinary employees with a regular income from a company they don't own. Pension companies are required to tell HMRC if a payment is missed, and the employer may be in trouble as a result. As a contractor you don't need yourself as an employee to be protected from yourself as an employer, so avoid all this by sticking with the single contributions option.

I set a salary target for the tax year, put nothing into my pension until the company has earned enough to pay that target, then put any further earnings for the year into the pension.

Depending on how much I'm working, as a semi-retired contractor I make single contributions once a year (at the end of the tax year) or quarterly or sometimes (when there is a few months of consecutive work and I've already reached my salary target) once a month.

[xoggoth]

Couple of things to check. As people live longer so rates from pensions get progressively lower. The last twenty years has seen rates halve and not sure it has bottomed yet. Also (unless it's changed in last 4 years) a pension in company name can be difficult to transfer to better annuity provider.

[tangent]

I have been putting the max into ISAs every year since they started and PEPs before that. Got just under 200k invested now. Are ISAs fair? Probably not. The tax advantages are very minor for basic rate tax payers. I think that a cap is likely to be introduced sooner or later.

SIPPs now look very worthwhile, but as many have said, how long before the rules change again?

[Boo]

How long will it be before we hear "It's not fair that the rich get to dodge tax by buying ISA's".

And is it fair ?

Boo

[MarillionFan]

I was planning to up.

I've been doing it personally for a number of years, but with going back contracting I was planning to up it to 12k per year. Also going to add into the wifes as well.

Pensions are only one part of the
overall equation though.

[centurian]

I fear you are right. This is going to be a one term Government and as sure as eggs are eggs, Red Ed will not want anyone keeping their own money under their own control. This will be a short lived reform, I fear I will not have enough time to strip all the SIPP money out and get it into ISA's before Labour are returned to power.

You're assuming of course that ISA's manage to survive the cull as well.

I can't help but wonder how much longer ISA's will be around for. How long will it be before we hear "It's not fair that the rich get to dodge tax by buying ISA's".

Someone investing the maximum ISA allowance since their creation in stocks and shares would have a 6 figure pot - and now be earning 6.5K per year (5% average growth) or 12K (8% growth) - all tax free.

[Fred Bloggs]

You will be one of the lucky few!

A 55% tax on your pension leftovers before it is passed on. But at least it can now be passed on. Effectively the gov't are reckoning they can divert baby boomer cash from annuity providers into their own coffers over the next 20+ years. They are either playing a long and clever game or teeing it all up for the next labour gov't to fook it all up once more.

I fear you are right. This is going to be a one term Government and as sure as eggs are eggs, Red Ed will not want anyone keeping their own money under their own control. This will be a short lived reform, I fear I will not have enough time to strip all the SIPP money out and get it into ISA's before Labour are returned to power.

[moorfield]

This is too good to be true, the gov't will do something to stop it, I'm sure.

You will be one of the lucky few!

A 55% tax on your pension leftovers before it is passed on. But at least it can now be passed on. Effectively the gov't are reckoning they can divert baby boomer cash from annuity providers into their own coffers over the next 20+ years. They are either playing a long and clever game or teeing it all up for the next labour gov't to fook it all up once more.

[Fred Bloggs]

With the scrapping of the annuity rules this week, pension rules are looking a lot more sensible, and will be easier to pass on to heirs.

Correct, I have enough income due from a deferred final salary scheme to qualify for pulling as much money as possible out of my SIPP. It will be going from the SIPP in to ISAs for me and Mrs Bloggs. This is too good to be true, the gov't will do something to stop it, I'm sure.

[moorfield]

With the scrapping of the annuity rules this week, pension rules are looking a lot more sensible, and will be easier to pass on to heirs.

[lje]

I put in 2000 a month and I am also intending to put another 24000 in as a lump sum by the end of the tax year.

I do this to avoid the 40% tax bracket. Also, combined with my husband's salary and the fact that we don't have children I can happily live on the money under the tax bracket.

You should ask yourself how much you can afford to do without until you retire. If you've got a large pot of money put aside and have used your ISA allowance then think about putting a chunk into pension.

[ChimpMaster]

I don't put anything in because I'd rather manage my own future. Pensions are good for some people but just not for me.

I'd rather invest in something that can be passed on to my children rather than just eaten up by the financial system after I have gone.

I mainly stick to ISAs and property, and a smattering of other, smaller investments.

[Scrag Meister]

£1500 per month.