From $7k to $13k that's the minimum range of profit return every week Many people don't realize that a strategy is simply a set of rules that an individual follows. It has absolutely nothing to do with the market whatsoever. The key to success is finding a set of rules you can follow consistently.
The stock market has been unfavorable for months and I keep losing money selling off during dip, I am very scared of holding now, how do you still make so much?
Toby, really pleased to see you are bigging up the pension advantages over ISAs as I felt you were not pointing out the miracle of tax relief to potential new / young investors in the past. Many thanks and keep up the great work.
I just discovered your youtube channel, and I love it! Thank you for all of these great videos. I’ve been living and working in the U.K. for the past 10 years and I was enrolled into a pension scheme since day one. I almost withdrew from it, but thankfully I didn’t and now I have a great looking pot 😊. The pension fund plus the Stocks ISA = the future looks bright 😅
Thank you for the good content and information regarding pensions. No one has ever explained it like this in much detail. I guess I have some homework to do.
Topics like this should be on the curriculum and less stuff about leaf cell structure at school! I’m teaching my kids about compound interest already and they are 8 & 12!
Idea for a video. Get an real life example of someone who has paid into a default DC pension scheme for 5+ years and analyse their returns performance and what stocks they held (inc bonds) and charges (each hidden fund charges and pension company charges). Then compare with alternative schemes offered by same pension company (if any) and also what the pot would have been if the client had xferred his pot each year to his/her own SIPP and invested in vanilla ETFs. I think it will be very hard as (AFAIK) most pension reports don't even report the annual performance gain/loss and it is very hard to find on their website too! Also many pension company calculators assume a %age gain of approx. 3%, so they are not even keeping up with inflation (or savings accounts) using a default pension. Also explain why the pension companies default scheme is typically 40% bonds with terrible performance even for a 30/40 year old person and why, as the pension company charges are based on a %age of the total, don't they strive to get you the most appropriate risk/reward pension portfolio rather that the just put everyone on the default scheme - surely it's a win/win?
I,ve just done this with my company pension I.ve just moved it from my default pension in to a another policy of my choice just waiting for it to be switched over also spoke to my personal pension adviser about moving my policy into a high risk policy after a chat with him I,ve moved it over now having this pension pension since I was 18 its already made a healthy amount of money but with switching up it will hopefully excell it more another good video and clearly explained
Hey lovely yes please do another video on how we can be more conscious about our pensions and how to change the structure to reflect our own investing needs. For instance l would like to collate my pensions and the have the ability to choose what l invest that money in i.e. more stocks etc.
Listen to Tony and all UA-camrs regarding pensions! NHS pension is a death sentence. You won’t receive it till you’re 67 maybe 71 as it’s line with state pension .And we all know post 60 your quality of life severely plummets. Even mid 50s isn’t that amazing but it’s what we unfortunately have to work with. So invest as much into isa, sips, work place pension, everything, aim to be able to retire at 57 (you don’t have to retire but at least be able to)
Hi Toby, thank you for your videos, I learned quite valuable information about investing and pension. Could you please make one video of comparison of the UK current working pension providers, eg charges and performance. It’ll be very helpful. Many thanks.
Hi Toby, your content is excellent as always, please put together the follow up on pension investment alternatives and recommends etc. Thank you so much for your all your time, effort and consideration towards all of us 👍
One point about the "100% of your salary" limit - some people e.g in sales get bonuses that can be large, and they may (or may not, check your contract!) be counted in your pension limits. Definitely read the small print here!
yes this is a great detail especially if you are in an industry where commission is paid. Back in my sales days commission was not counted for pension purposes...I should have put a lot more in :P
Just to note re Self-Employment: Only if your a Ltd/Partnership business can you claim as an expense. A sole trader can't deduct pension contributions as an allowable expense.
Hi Toby, great video mate, quite informative. I had a look at my pension investment options (L&G in my case) and there's a list of funds I could invest into, but tbh mate I really don't know what I'm looking at, could you please explain in a video what to look in a pension investment fund before I decide to invest in it. Cheers
In Belgium everybody who worked gets a final salary pension. Plus, pensions follow the consumer price index. Every time the index goes up by 2%, pensions also go up by 2%. I went for early retirement 13 years ago and my pension is now higher than my last salary. You can save privately during your career if you want extra pension, but many people don't even bother. Unless for tax relief reasons. I believe final salary pensions are the better system.
When is the best time to push the pension investments away from riskier investments like stocks and shares and towards safer investments such as bonds, etc? 5 years before retirement, 2 years before retirement?
Expensive apparently, good for small businesses wanting to invest in themselves. Other podcasters talk about using them occasionally for specific purposes to fund aspects of their business. Sass owning the property and company paying the rent to it etc.
I have a Scottish widows pension over 20 years ,self employed but thinking of starting a diy sipp alongside it. Not bad return SW but after learning about pensions and stocks etc I would like to experiment to see if I get better returns . Wot you think?
Hi, i have a Scottish Widows AVC that i manage online, i just invest in the Ethical Global fund, i also have a SIPP i started up and again i chose the Fidelity Global fund on the Moneybox platform as their fees are very reasonable to at 0.12. Any global fund and you cant go far wrong in my experience. Hope this helps, happy investing.
No harm in starting your own SIPP, starting small and taking your time. It will likely be a lot cheaper and you can have far more choice too. As usual my philosophy is always keep things simple. I'd get a nice global index fund and just contribute consistently :)
Personally I think people are crazy to not pay into a pension, it's free money. You put in X amount and then your employer will also put in X amount on top. I put in 5 percent, my employer puts in 10 percent, what's not to like
Any advice for funds already invested in the default fund? Should they moved to a different fund? Or just pick a new fund for all future contributions?
Geeat video. I'm looking for hints on what stocks to invest in. UK vs USA vs elsewhere? Perhaps a mix. technology (AI) is a big deal at the moment, but for how long? Medium to high risk focus so a good return is possible. Also, is it work employing an advisor and will it deliver a better result. I have 700k currently in my pension pot and I might retire in 5 years.
Is it worth me upping my pension % contribution through work for example adding an additional £200 a month so then my employer also adds £200 or shall I place that £200 into a stocks and shares ISA instead ?
How about drawing down funds against my house and putting it into a pension to make up for previous year's contributions? That would be a much higher return than the mortgage rate, right?
To use Carry Foward rules you need to use up this year's allowance first (£60k). That means your earned UK income (salary) must be at least £60k this tax year, otherwise you can't start using prior years' unused allowances. Remember that pension rules for tax relief do require relevant UK earnings being contributed to a pension, so this disqualifies a bunch of things counting as 'income', including rental income and dividends, or just dumping savings in when the equivalent salary isn't being received.
@@adrianl5899 thanks ... that's helpful, even if i now can't do it! ... pension rules are v confusing ... i guess that's why so many people don't bother
I'd certainly agree - the younger you are the more you should have exposed to stocks! It's a shame so many people are in poor default funds. Why is the default fund not depending on your age!!
@@TobyNewbatt One idea you may wish to suggest to new parents is to invest their new Family Allowance directly into their new born via a junior SIPP. They`ve never had this money and a new parent ` should ` be motivated to do anything for their new baby.We did this 26 years ago via ISA funds and now both are young adults with relatively huge pots already. All for free up to age 18.
I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks this year. Hope to make millions in 2024.
How about if one's gross salary of £27570 and on autoenrolment default strategy in NEST? By how much can one increase wotkplace pension contribution to reduce the £5000 pounds deduction on annual income tax and employee national insurance and graduate tax .pls?
Quick Question about contributing previous years into a Pension, I have seen conflicting information about this, and it looks like even if you had some available from previous years, you still could only put in a maximum of what you earnt in this year ???
For Carry Forward rules to apply so to use previous years' unused allowance, you first must use up all of this tax year's allowance (£60k). And to use up this year's allowance, you must therefore earn £60k or more as you can only contribute 100% of your earnings. If that is the case, you atill must meet some other rules. For anyone earning below £60k, they can contribute only up to what they earn and there is no ability to use Carry Forward and prior years unused allowances. (For fullness, non-earners can contribute £3600, £2880 net).
Great video! In the circumstance where an employer will NOT match any additional contributions above the minimum (I.e they are only willing to pay the 3% regardless of how much you personally contribute) is it better to open a SIPP to have more control over where it is invested? Or is having it compounding all in one place better off in the long run?
Great question - so for me after this it's up to you - open your own SIPP for sure or you could go down the ISA route - pros and cons, but it will likely be much cheaper to manage your own SIPP compared to a company one and you'll have way more choice.
Damn I think my pension is relief at source rather than net pay which is annoying. I think the tax man owes me some monies! I couldn't work out why it was wrong, but my pension get taken out after I've paid tax rather than before which makes it way harder to work out what % im putting in exacted
@@TobyNewbatt yes, thanks very much for the video. I've only gone into higher tax brackets recently because the tax thresholds have not been increased, so luckily I won't need to go back too far.
Toby - our company MD is extremely.... conservative on perks and benefits at work. Our company pension scheme has the company paying in a flat 5% of salary regardless of how much the employer decides to pay in. How common is this flat employer contribution and do I have any way to get the to consider a match contribution system? Is there a best practice HR policy or anything I can refer them to?
I'd say 5% is pretty good when you consider they only have to contribute 3% by law so that's decent. On the side if you want to contribute to your own SIPP you can open one and do that if you like. On your point about best practice, there's nothing that says a company has to do more than they are doing but you could make the argument that it would help people out in later life
Correct they just need to pay it from the company - it's the law. The same as National Insurance. It's just another cost that comes along with hiring a member of staff
Thanks for the information, much appreciated! I’m self employed (not a limited company) also employed with a local govt pension. Is it more tax efficient to open a SIPP or pay extra into my LGPS (they do not match additional contributions). I’m 56 so I may pay in 5 years more to my LGPS. Tia
the LGPS is a defined benefit scheme - you'd need to look into the fine print about what you can get if you pay more in. Thats a tough question! A SIPP will have no guarantees about the outcome but it will be yours to manage and you will get the tax relief as usual :)
One possibility, which doesn't appear to be well-known, is that if you make additional savings (Additional Voluntary Contributions - AVCs) into your employers' DB scheme, you may be able to use the AVC savings to fund all, or part of, the tax-free lump sum. This would leave more money in the DB pension "pot" to provide a larger income in retirement. I don't know if this applies to the LGPS but it's worthwhile asking about. If that is not allowed by your scheme, then you might as well transfer the AVC savings into your own SIPP, as long as you are happy to make investment decisions yourself.
Q. Say I wanted to switch to a UK self-invested pension and not have to tweak it for many years (low maintenance), what ETFs would you choose and what proportions would you suggest? Could you make three types: 'cautious' (maybe with some bonds or cash+interest), 'medium' and 'higher' risk examples? Would you need to review it each year? What if one of the ETFs was discontinued, would it be converted to cash within the pension and would you be warned? What would others suggest for long term portfolios in these three brackets?
Great questions Steve - in terms of ETFs that liquidate you'd get the value of the investment returned to you (unless it was merged with another one or purchased by another manager) On your other question - risk is subjective to you - but my view would be to keep it simple. Maybe have a global index fund ETF (something like FWRG or VWRP) and then alongside that a global bond fund? The percentages are all up to you but a cautious mix would be 60% stocks and 40% bonds in my view. However - I don't even see the need the bonds - I'd just keep more cash in a money market ETF or something like that - this eliminates any duration risk (as bonds got screwed in 2022). Anyway I hope that helps as some thinking out loud.
@@TobyNewbatt Thanks. I too cannot see why anyone would consider holding between 1-40% of their portfolio in bonds/MMF. e.g. why is it good to hold 20% in bonds/MMF? - that assumes that equities could drop by 80% in a very short time (before you could sell) - if that did happen it would be Armageddon anyway!
@@steve6375No, it doesn't assume that equities will drop by 80%, the bonds provide some stability against market volatility, so if stocks fall by 10%, then the value of your investments fall by 10, 8, or 6% respectively for a fund that is based on 100, 80 or 60% stocks. 2022 was an anomaly where stocks and bonds fell at the same time; normally, they don't. If you are still more than five years from retirement, then you probably don't think that bonds are necessary (and I would likely agree) but as you get closer to retirement you become more aware of volatility risk and more risk-averse (you don't want the value of your pot to fall), so gradually dialing-down the proportion of shares starts to make more sense.
Hi Toby, I think I've mentioned this before, if you are on the limit of the 40% tax threshold, would it be worth taking a salary sacrifice if you are potentially getting a pay rise to say £55,000 per year and putting the extra over the 40% tax threshold straight into a SIPP account?. Would that work out better off?. I hope that makes sense.
I see what you mean - if your employer allows it then you could salary sacrifice into a pension, I think thats a smart idea. Putting it into a SIPP would work out the same, but you'd need to claim back the additional tax? I guess the salary sacrifice is simpler but in financial terms it would come out the same?
It really depends. They have a legal limit of 0.75% in their defaults, but most sit under this around 0.45% or so. Its definitely more expensive than if you managed it yourself that’s for sure
Just a note that the £3,600 includes the HMRC top-up for basic-rate taxpayers, so the maximum you can pay in, with no relevant earnings, is actually £2,880 (and then you receive the 25% top-up - £720 HMRC contribution, as well). If you are working part-time, for example, then your maximum contribution is 100% of annual earnings, up to a ceiling of £60k.
No, as said it's £3600 (£2880 net) for pensions if you have no relevant earnings. Should you be under 50 and have a Lifetime ISA, you can get the same 25% top up each year on a max £4k contribution (topped to £5k each year). LISAs have their own rules to understand, of course.
I'm not aware that the NMPA rises have been legislated to rise with SPA in the future ? It was talked about and advised by think tanks but there's nothing in the last Finance bill beyond that mandated rise to 57 in April 2028. BTW Are you planning to cover the upcoming quirk when 2028 comes along for those that are 55 before April 2028 but aren't 57 by then as they will have legal access to their pension - but then it will be taken away until they reach 57 !
Can you please clarify something. If someone made 50350 in a year can he claim 40% tax relief to put in SIPP £15000? Or you only get the additional 20% to the amount above 50270?
You don’t get more money than you earned, think about it was getting refunded the tax you did pay. You would only get the extra 20% on the £70 in that example if you raised with hmrc.
You only get the extra 20% on the amount you earn above £50,270. So if your income was £50,300 then you would get 40% of £30 back. But only 20% is given automatically, you have to contact HMRC for the additional 20%.
@@TobyNewbatt thanks for clarifying this’s. Asked an accountant and didn’t know. So my partner will have to invest in the isa next as she can make more than 20% there
@@porschecarreras992cabriole8I'm not sure how the ISA helps because money going into an ISA is already taxed. How do you expect to get more than 20% back? The main benefit of an ISA is the flexibility - it can be accessed at any time - you are not constrained by the government mandated pension access age.
Does anyone ever opt out? I have a friend who isn’t saving for a pension because the government are going to crash money with a CBDC and steal all of our money.
I know two people who opted out of a very generous final salary scheme with a very large and successful multinational company because they "didn't want to give the company their money". Stupid much.
I personally don't trust pensions, they seem to the be Govt of day's Cash Cow, i prefer S&S Isa's. At least with an isa, one has full control instead of money blocked until retirement, No Thankyou..
So for example if you worked for the NHS you’d reject the pension when it’s based on salary and has nothing to do with the stock market that can be volatile, not to mention the employer contributes nearly a quarter of your salary. Ok then mate 😂
This is a valid point, i used to just invest in S&S isa, and collect bullion. But now that im only 22 years away from accessing a sipp, i decided to liquidate everything and put it into a SIPP, I like that immediate 20% top up too. And I can’t be tempted to delve in and out of it. At the end of the day investing is personal and what’s best for you. Our money is better off in a sipp or a s and s isa than in whetherspoons
Or, keep putting money into pention, government keeps raising the age and boom never retire orrrrr retire and get taxed lol no ty ill just pay into s and p
This is true in the UK not the US. Only 5% of use workers get pensions. They are all govt workers. In the US the 401k killed off the pension. Its over.
From $7k to $13k that's the minimum range of profit return every week Many people don't realize that a strategy
is simply a set of rules that an individual
follows. It has absolutely nothing to do with the market whatsoever. The key to success is finding a set of rules you can follow consistently.
The stock market has been unfavorable for months and I keep losing money selling off during dip, I am very scared of holding now, how do you still make so much?
I'm a newbie in investment, please can you guide me through on how you made it
It's important to always stay informed and explore different investment opportunities to grow your wealth and reach your financial goals.
..
My portfolio has been going down the drain while I try on my own, I just don't know what to do,is there anyway I can reach your financial advisor?
she's mostly on Telegrams, using the user name above
Toby, really pleased to see you are bigging up the pension advantages over ISAs as I felt you were not pointing out the miracle of tax relief to potential new / young investors in the past. Many thanks and keep up the great work.
I just discovered your youtube channel, and I love it! Thank you for all of these great videos. I’ve been living and working in the U.K. for the past 10 years and I was enrolled into a pension scheme since day one. I almost withdrew from it, but thankfully I didn’t and now I have a great looking pot 😊. The pension fund plus the Stocks ISA = the future looks bright 😅
you are getting closer to 100k followers. happy to know that more and more ppl are learning from your videos!
Yes please will really appreciate a video on pension investments. Thank you for your hard work.
Thank you for the good content and information regarding pensions. No one has ever explained it like this in much detail. I guess I have some homework to do.
A follow up video would be great. Recently got into investing and your videos have been a massive help so thank you
This is the best investment channel out there - really solid and well-explained information. Many thanks Toby
Topics like this should be on the curriculum and less stuff about leaf cell structure at school! I’m teaching my kids about compound interest already and they are 8 & 12!
love it! :)
Idea for a video. Get an real life example of someone who has paid into a default DC pension scheme for 5+ years and analyse their returns performance and what stocks they held (inc bonds) and charges (each hidden fund charges and pension company charges). Then compare with alternative schemes offered by same pension company (if any) and also what the pot would have been if the client had xferred his pot each year to his/her own SIPP and invested in vanilla ETFs. I think it will be very hard as (AFAIK) most pension reports don't even report the annual performance gain/loss and it is very hard to find on their website too! Also many pension company calculators assume a %age gain of approx. 3%, so they are not even keeping up with inflation (or savings accounts) using a default pension. Also explain why the pension companies default scheme is typically 40% bonds with terrible performance even for a 30/40 year old person and why, as the pension company charges are based on a %age of the total, don't they strive to get you the most appropriate risk/reward pension portfolio rather that the just put everyone on the default scheme - surely it's a win/win?
Toby can you make some content about comparing the fund performance and how to spot that your fund underperforming 🙏🙏
Opted out of DC work pension to get allowance (taxable) to save up for house deposit. Need to live somewhere after all…
Brilliant video Toby. Could you please do a video on choosing index funds for your S.I.P.P
I,ve just done this with my company pension I.ve just moved it from my default pension in to a another policy of my choice just waiting for it to be switched over also spoke to my personal pension adviser about moving my policy into a high risk policy after a chat with him I,ve moved it over now having this pension pension since I was 18 its already made a healthy amount of money but with switching up it will hopefully excell it more another good video and clearly explained
Hey lovely yes please do another video on how we can be more conscious about our pensions and how to change the structure to reflect our own investing needs. For instance l would like to collate my pensions and the have the ability to choose what l invest that money in i.e. more stocks etc.
One of the best videos on this topic 👏🏻
Thank you 🙏
My Pension is with NEST, best thing I've ever done was move it to the "sharia" fund. Its doing very well better than my S&P 500 in my sipp!
Listen to Tony and all UA-camrs regarding pensions!
NHS pension is a death sentence.
You won’t receive it till you’re 67 maybe 71 as it’s line with state pension .And we all know post 60 your quality of life severely plummets.
Even mid 50s isn’t that amazing but it’s what we unfortunately have to work with. So invest as much into isa, sips, work place pension, everything, aim to be able to retire at 57 (you don’t have to retire but at least be able to)
You can take the NHS pension earlier than State pension age, it just reduces as a result. Still a great pension.
Hi Toby, thank you for your videos, I learned quite valuable information about investing and pension. Could you please make one video of comparison of the UK current working pension providers, eg charges and performance. It’ll be very helpful. Many thanks.
A video on SIPP's would be excellent help.
Hi, thanks for the great advice. If you could make an in-depth video on pensions that would be great.
Can you please make a video on the alternative funds and choosing different risk funds instead of the default option.
Hi Toby, your content is excellent as always, please put together the follow up on pension investment alternatives and recommends etc. Thank you so much for your all your time, effort and consideration towards all of us 👍
Great suggestion!
One point about the "100% of your salary" limit - some people e.g in sales get bonuses that can be large, and they may (or may not, check your contract!) be counted in your pension limits. Definitely read the small print here!
yes this is a great detail especially if you are in an industry where commission is paid. Back in my sales days commission was not counted for pension purposes...I should have put a lot more in :P
Great video for beginners, any chance of some content that is more advanced.
Would like to see a video on pension investments, Thank you!
Stock market had a wild day today 🤣🤣the panic from some people is crazy. Hope you’re having a good day Toby
stock market having a lovely stock market type of day :P
The sale is on !
Very lucky to be able to contribute 8% and the company I work for then adds 14%!
Just to note re Self-Employment: Only if your a Ltd/Partnership business can you claim as an expense. A sole trader can't deduct pension contributions as an allowable expense.
Hi Toby, great video mate, quite informative. I had a look at my pension investment options (L&G in my case) and there's a list of funds I could invest into, but tbh mate I really don't know what I'm looking at, could you please explain in a video what to look in a pension investment fund before I decide to invest in it. Cheers
Would love a video on how to move previous pension into my sipp
Very comprehensive video. Fantastic as always Toby.
He missed out partial transfers, which was probably deliberate, but worth including in another video.
Another great video thanks Toby. Alex
Glad you enjoyed it
A video on how to look for pension funds would be good
In Belgium everybody who worked gets a final salary pension. Plus, pensions follow the consumer price index. Every time the index goes up by 2%, pensions also go up by 2%. I went for early retirement 13 years ago and my pension is now higher than my last salary. You can save privately during your career if you want extra pension, but many people don't even bother. Unless for tax relief reasons. I believe final salary pensions are the better system.
Income tax bands in Belgium are crazy, pay 25% from €0 then 40% from €15k. No wonder it’s as you describe.
That's called a ponzi scheme.
@@coderider3022 You're right about that.
Great vid, such a fantastic channel
Cheers David, hope you're all good :)
When is the best time to push the pension investments away from riskier investments like stocks and shares and towards safer investments such as bonds, etc? 5 years before retirement, 2 years before retirement?
Thanks for the video ,,, Insightful
Hey Toby, for self-employed ones, it could be SSAS pension instead of SIPP.
Expensive apparently, good for small businesses wanting to invest in themselves. Other podcasters talk about using them occasionally for specific purposes to fund aspects of their business. Sass owning the property and company paying the rent to it etc.
So helpful. Thank you.
I have a Scottish widows pension over 20 years ,self employed but thinking of starting a diy sipp alongside it. Not bad return SW but after learning about pensions and stocks etc I would like to experiment to see if I get better returns . Wot you think?
Hi, i have a Scottish Widows AVC that i manage online, i just invest in the Ethical Global fund, i also have a SIPP i started up and again i chose the Fidelity Global fund on the Moneybox platform as their fees are very reasonable to at 0.12. Any global fund and you cant go far wrong in my experience. Hope this helps, happy investing.
No harm in starting your own SIPP, starting small and taking your time. It will likely be a lot cheaper and you can have far more choice too. As usual my philosophy is always keep things simple. I'd get a nice global index fund and just contribute consistently :)
Start your own SIPP and pick 100% Global Equity Fund, thats all you need.
Great video, as per usual.
Personally I think people are crazy to not pay into a pension, it's free money.
You put in X amount and then your employer will also put in X amount on top.
I put in 5 percent, my employer puts in 10 percent, what's not to like
Any advice for funds already invested in the default fund? Should they moved to a different fund? Or just pick a new fund for all future contributions?
Geeat video. I'm looking for hints on what stocks to invest in. UK vs USA vs elsewhere? Perhaps a mix. technology (AI) is a big deal at the moment, but for how long? Medium to high risk focus so a good return is possible. Also, is it work employing an advisor and will it deliver a better result. I have 700k currently in my pension pot and I might retire in 5 years.
Is it worth me upping my pension % contribution through work for example adding an additional £200 a month so then my employer also adds £200 or shall I place that £200 into a stocks and shares ISA instead ?
How about drawing down funds against my house and putting it into a pension to make up for previous year's contributions? That would be a much higher return than the mortgage rate, right?
To use Carry Foward rules you need to use up this year's allowance first (£60k). That means your earned UK income (salary) must be at least £60k this tax year, otherwise you can't start using prior years' unused allowances.
Remember that pension rules for tax relief do require relevant UK earnings being contributed to a pension, so this disqualifies a bunch of things counting as 'income', including rental income and dividends, or just dumping savings in when the equivalent salary isn't being received.
@@adrianl5899 thanks ... that's helpful, even if i now can't do it! ... pension rules are v confusing ... i guess that's why so many people don't bother
Title is a TITANIC
Younger people up to around age 40 should be very high in stocks 90-100% , imo. This needs to be pushed hard.
I'd certainly agree - the younger you are the more you should have exposed to stocks! It's a shame so many people are in poor default funds. Why is the default fund not depending on your age!!
@@TobyNewbatt One idea you may wish to suggest to new parents is to invest their new Family Allowance directly into their new born via a junior SIPP. They`ve never had this money and a new parent ` should ` be motivated to do anything for their new baby.We did this 26 years ago via ISA funds and now both are young adults with relatively huge pots already. All for free up to age 18.
@johnristheanswer please can you expand on this 'new family allowance'? Is it the same as child benefit?
I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks this year. Hope to make millions in 2024.
Yes do more on funds 😁
How about if one's gross salary of £27570 and on autoenrolment default strategy in NEST? By how much can one increase wotkplace pension contribution to reduce the £5000 pounds deduction on annual income tax and employee national insurance and graduate tax .pls?
What about standard private pensions for self employed? Are there any good companies you recommend please? 🤔
Ok great thanks 😀
Can you make a video on sipp please? Thanks
Lovely video please make more
Quick Question about contributing previous years into a Pension, I have seen conflicting information about this, and it looks like even if you had some available from previous years, you still could only put in a maximum of what you earnt in this year ???
For Carry Forward rules to apply so to use previous years' unused allowance, you first must use up all of this tax year's allowance (£60k). And to use up this year's allowance, you must therefore earn £60k or more as you can only contribute 100% of your earnings. If that is the case, you atill must meet some other rules.
For anyone earning below £60k, they can contribute only up to what they earn and there is no ability to use Carry Forward and prior years unused allowances.
(For fullness, non-earners can contribute £3600, £2880 net).
What about a NHS pension video now? 😊😅
Great video! In the circumstance where an employer will NOT match any additional contributions above the minimum (I.e they are only willing to pay the 3% regardless of how much you personally contribute) is it better to open a SIPP to have more control over where it is invested? Or is having it compounding all in one place better off in the long run?
Great question - so for me after this it's up to you - open your own SIPP for sure or you could go down the ISA route - pros and cons, but it will likely be much cheaper to manage your own SIPP compared to a company one and you'll have way more choice.
Damn I think my pension is relief at source rather than net pay which is annoying. I think the tax man owes me some monies! I couldn't work out why it was wrong, but my pension get taken out after I've paid tax rather than before which makes it way harder to work out what % im putting in exacted
Good news is that you can go back several years and claim that money :)
@@TobyNewbatt yes, thanks very much for the video. I've only gone into higher tax brackets recently because the tax thresholds have not been increased, so luckily I won't need to go back too far.
Toby - our company MD is extremely.... conservative on perks and benefits at work. Our company pension scheme has the company paying in a flat 5% of salary regardless of how much the employer decides to pay in. How common is this flat employer contribution and do I have any way to get the to consider a match contribution system? Is there a best practice HR policy or anything I can refer them to?
I'd say 5% is pretty good when you consider they only have to contribute 3% by law so that's decent. On the side if you want to contribute to your own SIPP you can open one and do that if you like. On your point about best practice, there's nothing that says a company has to do more than they are doing but you could make the argument that it would help people out in later life
Where does the employer get the money to pay into the pension? Is it just from their usual selling products services?
Correct they just need to pay it from the company - it's the law. The same as National Insurance. It's just another cost that comes along with hiring a member of staff
But when you come to take income from your pension, doesn’t the income tax wipe out the tax break in the first place?
nope :) - you don't take your pension in one go, you can be smart with it and most people will be in a lower tax bracket in retirement
Thanks for the information, much appreciated! I’m self employed (not a limited company) also employed with a local govt pension. Is it more tax efficient to open a SIPP or pay extra into my LGPS (they do not match additional contributions). I’m 56 so I may pay in 5 years more to my LGPS. Tia
the LGPS is a defined benefit scheme - you'd need to look into the fine print about what you can get if you pay more in. Thats a tough question! A SIPP will have no guarantees about the outcome but it will be yours to manage and you will get the tax relief as usual :)
One possibility, which doesn't appear to be well-known, is that if you make additional savings (Additional Voluntary Contributions - AVCs) into your employers' DB scheme, you may be able to use the AVC savings to fund all, or part of, the tax-free lump sum. This would leave more money in the DB pension "pot" to provide a larger income in retirement. I don't know if this applies to the LGPS but it's worthwhile asking about. If that is not allowed by your scheme, then you might as well transfer the AVC savings into your own SIPP, as long as you are happy to make investment decisions yourself.
Q. Say I wanted to switch to a UK self-invested pension and not have to tweak it for many years (low maintenance), what ETFs would you choose and what proportions would you suggest? Could you make three types: 'cautious' (maybe with some bonds or cash+interest), 'medium' and 'higher' risk examples? Would you need to review it each year? What if one of the ETFs was discontinued, would it be converted to cash within the pension and would you be warned? What would others suggest for long term portfolios in these three brackets?
Great questions Steve - in terms of ETFs that liquidate you'd get the value of the investment returned to you (unless it was merged with another one or purchased by another manager)
On your other question - risk is subjective to you - but my view would be to keep it simple. Maybe have a global index fund ETF (something like FWRG or VWRP) and then alongside that a global bond fund? The percentages are all up to you but a cautious mix would be 60% stocks and 40% bonds in my view.
However - I don't even see the need the bonds - I'd just keep more cash in a money market ETF or something like that - this eliminates any duration risk (as bonds got screwed in 2022). Anyway I hope that helps as some thinking out loud.
@@TobyNewbatt Thanks. I too cannot see why anyone would consider holding between 1-40% of their portfolio in bonds/MMF. e.g. why is it good to hold 20% in bonds/MMF? - that assumes that equities could drop by 80% in a very short time (before you could sell) - if that did happen it would be Armageddon anyway!
@@steve6375No, it doesn't assume that equities will drop by 80%, the bonds provide some stability against market volatility, so if stocks fall by 10%, then the value of your investments fall by 10, 8, or 6% respectively for a fund that is based on 100, 80 or 60% stocks. 2022 was an anomaly where stocks and bonds fell at the same time; normally, they don't. If you are still more than five years from retirement, then you probably don't think that bonds are necessary (and I would likely agree) but as you get closer to retirement you become more aware of volatility risk and more risk-averse (you don't want the value of your pot to fall), so gradually dialing-down the proportion of shares starts to make more sense.
Hi Toby,
I think I've mentioned this before, if you are on the limit of the 40% tax threshold, would it be worth taking a salary sacrifice if you are potentially getting a pay rise to say £55,000 per year and putting the extra over the 40% tax threshold straight into a SIPP account?. Would that work out better off?. I hope that makes sense.
I see what you mean - if your employer allows it then you could salary sacrifice into a pension, I think thats a smart idea. Putting it into a SIPP would work out the same, but you'd need to claim back the additional tax? I guess the salary sacrifice is simpler but in financial terms it would come out the same?
Toby, great video. One question for you, what are the charges on average for these employer pension schemes managed by one of the big firms?
It really depends. They have a legal limit of 0.75% in their defaults, but most sit under this around 0.45% or so. Its definitely more expensive than if you managed it yourself that’s for sure
@@TobyNewbatt so helpful Toby. I wish there was a legal limit sales rep could put on their products 😂😂
@@micheallavelle1580 maybe in another life :P
If you’re not working, but you have cash savings, can you put £48,000 from your savings in a pension and still get a top up?
How would that work….?
You get an allowance of £3,600 if you have no income. But that’s it you can’t whack in a huge amount I’m afraid. Feel free to confirm 👍
Just a note that the £3,600 includes the HMRC top-up for basic-rate taxpayers, so the maximum you can pay in, with no relevant earnings, is actually £2,880 (and then you receive the 25% top-up - £720 HMRC contribution, as well). If you are working part-time, for example, then your maximum contribution is 100% of annual earnings, up to a ceiling of £60k.
@@davem.4003 yes indeed, same with the £60,000 limit as I mentioned in the video - it includes the tax relief :)
No, as said it's £3600 (£2880 net) for pensions if you have no relevant earnings. Should you be under 50 and have a Lifetime ISA, you can get the same 25% top up each year on a max £4k contribution (topped to £5k each year). LISAs have their own rules to understand, of course.
A house is a liability more than asset😢😅😊
I'm not aware that the NMPA rises have been legislated to rise with SPA in the future ? It was talked about and advised by think tanks but there's nothing in the last Finance bill beyond that mandated rise to 57 in April 2028. BTW Are you planning to cover the upcoming quirk when 2028 comes along for those that are 55 before April 2028 but aren't 57 by then as they will have legal access to their pension - but then it will be taken away until they reach 57 !
Thanks for that - maybe a nice little video idea on that quirk!
Can you please clarify something. If someone made 50350 in a year can he claim 40% tax relief to put in SIPP £15000? Or you only get the additional 20% to the amount above 50270?
You don’t get more money than you earned, think about it was getting refunded the tax you did pay. You would only get the extra 20% on the £70 in that example if you raised with hmrc.
Only the amount above can be claimed 👍. No free money unfortunately.
You only get the extra 20% on the amount you earn above £50,270.
So if your income was £50,300 then you would get 40% of £30 back.
But only 20% is given automatically, you have to contact HMRC for the additional 20%.
@@TobyNewbatt thanks for clarifying this’s. Asked an accountant and didn’t know. So my partner will have to invest in the isa next as she can make more than 20% there
@@porschecarreras992cabriole8I'm not sure how the ISA helps because money going into an ISA is already taxed. How do you expect to get more than 20% back? The main benefit of an ISA is the flexibility - it can be accessed at any time - you are not constrained by the government mandated pension access age.
Can you cover a civil service pension? Thats what i get think its 30% never really know how it works and theres literally 0 videos on the subject.
Good video idea - might only appeal to a small audience though!
Search for Civil Service Pension Scheme in UA-cam, there's a series of really useful videos uploaded by the provider
@@ironmine I’m interested in this aswell
Are you in the Alpha scheme?
@@TobyNewbattMaybe a public sector video including NHS as a small section as well as a Civil Service one.
Does anyone ever opt out?
I have a friend who isn’t saving for a pension because the government are going to crash money with a CBDC and steal all of our money.
Nutter 😂
People do opt out im afraid, the numbers look to be around 15% who choose to opt-out...Your friend may need some help :P
@@TobyNewbatt
He’s too far gone unfortunately.
I know two people who opted out of a very generous final salary scheme with a very large and successful multinational company because they "didn't want to give the company their money". Stupid much.
@@kw8757
Yea similar thing.
Just tragic.
I personally don't trust pensions, they seem to the be Govt of day's Cash Cow, i prefer S&S Isa's. At least with an isa, one has full control instead of money blocked until retirement, No Thankyou..
So for example if you worked for the NHS you’d reject the pension when it’s based on salary and has nothing to do with the stock market that can be volatile, not to mention the employer contributes nearly a quarter of your salary. Ok then mate 😂
Govt can decide to start taxing your ISAs. Such an idea has also been floating around for a while
@@belinda7073you can’t access it till you’re 67 and the government will happily stretch that out.
Plus DB is overrated
This is a valid point, i used to just invest in S&S isa, and collect bullion.
But now that im only 22 years away from accessing a sipp, i decided to liquidate everything and put it into a SIPP, I like that immediate 20% top up too.
And I can’t be tempted to delve in and out of it.
At the end of the day investing is personal and what’s best for you.
Our money is better off in a sipp or a s and s isa than in whetherspoons
I think it comes down to “eggs and baskets”, I.e spread your money around a bit 😀👋
Or, keep putting money into pention, government keeps raising the age and boom never retire orrrrr retire and get taxed lol no ty ill just pay into s and p
This is true in the UK not the US. Only 5% of use workers get pensions. They are all govt workers. In the US the 401k killed off the pension. Its over.