pension sums arghhhhhhhhhhhh!

can any1 help me with somes figures.the thing is i signed upto a pension at work minimum i can put in is 3% company put in 5% but i chose to put in 5% and company put in 7% but now i wanna do an ISA.but it is too late to change my percentage i put in from 5% to the minimum of 3% either i cancel the pension all together or wait til october before changing it.i earn £23000 a year can any1 work out roughly how much my 5% contribution is gonna be? i just read this back 2 myself and dont really think any1 will understand but worth a shot,any help appreciated


Not an expert on pensions but I asume the extra you are paying in is a AVC (Additional Voluntery Contribution).

If so I believe this goes into your pension pot BEFORE tax is paid on it.

So if you agree to pay in say £100 a month, that goes in BEFORE it is taxed, so a full £100 goes in to your pension pot.

This is a VERY tax efficient way of "saving" money.

Anything you put into an ISA will already have had tax paid on it when you earnt it, so although interest paid with an ISA is tax free you will have already paid tax on what you pay in.

I think it is better to pay in the AVC than to use an ISA.

I know you wont get your money till you retire, but a pension pot is not taxed, so you pay no tax on money going in, and no tax on money coming out.

Also, the earlier you put money in your pension the more interest it can gain over the years.

I retired in my early 50s a few years ago and I am on a good pension so can live very well even though I am not working so putting money IN your pension pot early is a good idea.

If what you are paying IS an AVC then it comes off your pay slip BEFORE tax is paid on it.

If you are earning £23,000 a year then 1% is £230, so 5% would be £1150.

So you are putting in £1150 a year to your pension pot.

But remember that would be taxed if you got it in your pay, so say you pay 25% tax overall then you would actually only take home about £862 of that £1150.

That works out at about £72 a month.

Some figures above are very rough and I am NOT a financial expert.

Hey don't do it ,company is matching your contributions (3% upt 5% you, 5% upt 7% company), no legal investment :whistling:would give you 100% interest on your money as soon as you put cash in.....


Original Poster

thanx for having a go guilbert so confusing all this pension stuff.gave u some rep;-)

Guilbert is spot on with what he is saying, pension is a massive tax advantage. As well as growing tax free, it also benfits from tax relief so bascially you pay £1150 per year, your company contributes £1610 on top. So going into your 'pot' is £2760 pa.

Then on top of this, it is 'grossed up' by Mr Brown and his merry band so it ends up that £3450 pa goes into your pension for £1150 from you. HUGE money to be gained but you have to remember 2 things, as guilbert mentioned, accessibility is an issue ie you cant get it until you retire, UK minimum is 55 currently.

Other thing is that it will be managed by your companies pension trustees and they will choose the risk level (what it invests into).

Hope that makes sense, any questions drop me a message and can try to help.

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