14 Nov Why should you have a pension?
Tax efficient Saving – Your Pension
A pension is a great tax-efficient way to save for your future.
With the workplace pension scheme now fully in place it means everyone has the chance to save without thinking about it. While the employer has to take the administrative burden for the workplace pension, the benefit is all for the employee so don’t let this opportunity go to waste.
Pensions are one most tax efficient ways to invest. If you are a basic rate taxpayer (20%), you can save £100 into a pension fund and it will cost you £80 (or if you are a higher rate tax payer (40%) the cost will be £60, but you do need to check how the pension scheme and your employer administers the tax relief, as you may have to claim back the additional tax relief via separate claim, or on your Self Assessment Tax Return.
Employers do also have the option to use salary sacrifice on workplace pension schemes, and this could add even more tax savings to your pension fund if applied correctly.
Making a workplace pension contribution helps to get in the habit of saving, and it’s really easy because it comes straight out of your wages each week / monthly before tax relief has been applied.
If you can save a little extra, rather than the statutory percentage, it could make a big difference to your pension pot when you retire. The money you put aside in your pension will be given the chance to grow over time if it’s invested. It’s a great tax efficient way to save and can provide a valuable income for your retirement.
There is also now more “pension freedom”, meaning you have more flexibility on deciding what to do with your pension when you decide to draw it, which is currently available on workplace pension schemes from the age 55.
Find out more about what your choices are by visiting the pensions advisory service here.
As an employer it is worth spending time with your employees to help them understand the impact of tax relief on their pension. Do you have concerns about employing people or setting up your first work place pensions scheme?
EA Assist can help you by providing a comprehensive set up service for employers in relation to Workplace Pensions and Payroll Responsibilities with our 3 recommend scheme providers – NEST, The Peoples Pension and Aviva. We also work with a number of financial advisers if you need further assistance and advice for you or your staff.
Contact EA Assist now to find out more about our fixed fee set up services starting from £250+VAT.