If you are making pension contributions from your net salary, even after the tax relief you receive you have not made up the deductions in your wages. The key is National Insurance Contributions (NIC)!

Let me give you an example…

You are a higher rate taxpayer and you are making net monthly contributions to your pension of £500.

With basic rate tax relief the gross contribution to your pension is £625. Add to that the higher rate tax relief of £125 that can then be claimed through an extension of your tax code or through self assessment, and you receive total tax relief of £250.

Sounds a good deal right?

Wrong! The gross salary you have used to pay that £500 contribution totals £847.46 when you take account of income tax and NIC at your marginal rate.

Salary Sacrifice could add over 25% extra to your pension!

Now consider that your employer makes a contribution to your pension of £847.46 which puts you in front straightaway.

The employer can offset the pension contribution against corporation tax AND also saves employers NIC of 12.8%. Persuade your employer to add the NIC savings to your pension contribution and this will result in a total contribution to your pension of £955.93.

That’s a surplus of £205.93 going into your pension each month, 27% higher than the personal contribution from your net wage!

If you want to make your pension contributions work harder for you, call for your free consultation on 0844 848 2277.

We were approached by a company, who’s six directors had invested into a scheme which left them with that feeling.

On paper it looked like a great scheme, where-by the companies premises were incorporated into the pension pot. The company then paid rent into the pension scheme, helping it grow whilst reducing the companies tax bill.

Great idea.

Except this didn’t account for the retirement plans of the directors.

Their ages varied greatly. So what was going to happen when one was ready to retire?

Before this became a problem we arranged to transfer the assets from the company scheme into individual SIPP (Self Invested Personal Pension) arrangements.

Moving to individual SIPP’s offers the following benefits:

1) You have control of your pension

Unlike in the company scheme, you now have control of the invested assets. The decisions of how and when to take your benefits are down to you. This is of particular benefit if you are forced to retire early due to ill health.

2) You can diversify your investments

Reduce the reliance of one asset class (in this case, commercial property). You can then explore alternative investment strategies that are not correlated to traditional investment.

3) Your pension becomes fully portable

When your pension is in an individual scheme it can be transferred, should you change employment.

Our clients are so pleased with the new scheme, one of them stated (name withheld for privacy reasons):

“We were happy with our original scheme, but as time went on the realisation of what was ahead dawned on us. Ralph met with us all and within a short amount of time had arranged a scheme that solved everything. We couldn’t be happier.”

The message here is clear. It’s always worth checking how your retirement plans are going to give you the best return.

We can help you. Call on 0844 848 227 and we can start on your Life Plan today.