Money Lesson Single

When the allowance shrinks

A reinsurance broker of 52 has put 12% of a £360,000 salary into his pension for twenty years without thinking about it.

His yearly allowance is now tapered to £10,000, so most of what he pays in is charged straight back: is the pension still the right home for that money?

Employment Expenses ISA Investments

Redirect it

3 Goals

Stop the pension contribution, take the pay, and put what survives the tax into the ISA and the investment account.

Try this plan

Employment Expenses ISA Investments

Contribute anyway

3 Goals

Keep sacrificing 12% into the pension and pay the annual allowance charge on the excess every year.

Try this plan

Redirect it Contribute anyway

Once the allowance is at its floor the charge claws back nearly all of the relief, so redirecting the same money leaves you ~£174.5k better off.