Pension not tax effective?

[SuddenlyHighEarning]

Dear knowledgeable Mumsnetters!

What should I do with my pension contributions if they’re not tax effective?

I’m an employee and a sudden and significant jump in salary after mat leave now has me earning about 350k which I believe takes me over the thresholds for pension contributions coming off pre-tax salary.

The thing is - if I don’t put that money into pension, it’ll be taxed anyway, so what’s the benefit in moving it out of a (well performing) pension scheme into something else? Am I missing something really obvious here?

I know I can use up my allowance from the last 3 years (when I was earning significantly less), but am a bit confused about what I should be doing going forward…

Thank you @leresa and I’m genuinely in awe of your financial skills. I found the tapering calculations really complicated and am not even sure I got them completely right (a significant part of my income is bonus based which maybe complicates things) Feel like I’ll be on the phone to HMRC a lot this year when doing my tax return!
Not sure though that a pension for DP is sensible because, absent an income, it’ll be my (after-tax) earnings going into that. And then it sounds like it’ll be taxed again when drawn down…

Congrats on the pay rise 🎉

you really do need a good IFA
we went with a full service one and they can access lots of products you wouldn’t necessarily feel confident about tackling on your own.

mine also offer tax services so the two functions can work hand in hand if that makes sense

We also have JISAs (£9k limit pa) and SIPPs (£2880 limit for tax relief) for each dc.

Tapering is a mess, but the least you should be able to contribute is £10k, plus carry forward for the last 3 years.

Depending on the rate of employer contributions you get it may be worth continuing to contribute and sucking up the AA charge.

Some employers give access to an adviser to help with this stuff (O used to have an annual chat with a man from Aon about what I could put in efficiently). Ask HR if yours offers this.

That's definitely being tight.

This is like going on ‘Who Wants to be a Millionaire’ and asking the audience on the £million question.

Not very helpful to @SuddenlyHighEarning , but anyone this employable and highly-paid should at least think about moving elsewhere. The tax environment for high earners in the UK is not very welcoming.

(Although why you would take financial advice on Mumsnet from a stranger going by the name of AuntyBumBum is entirely beyond me.)

Yes move to Sweden or the US you will of course be better off ( hint that may not be totally truthful )

@AuntyBumBum it is helpful - after a certain wage, it is not worthwhile to put more than c. £10k per year into your pension and you are better off investing via other means is what I am saying as you don't get tax relief that others get

If you are earning that sort of money you need an IFA not a bunch of randoms on the internet.

I am a retired IFA and I could give no meaningful advice with so little information.

I am quite a high earner (lawyer). I did have a SIPP until I was 55 but cashed it in as lost faith in pensions so gave HMRC loads of money and gave the children the rest for housing. Now I just save. I realise that is not what most people choose to do but I like to keep things simple (and I paid the mortgage off last year so made that a priority if I had any spare money. I am not going to let the tax tail wag the dog (although I realise I am cutting my nose off to spite my face but can afford to be perverse).

Thanks to all who’ve given advice, it’s really appreciated and has given me some peace of mind that I’m on the right track with the digging I’ve already done and some pointers to other options to consider.

To all those who are saying that I need “proper” IFA advice - sure, but I am grateful for the amazing resource that MN is, just like everyone else who posts on here with medical questions (who all need to see a doctor), or concerns about their kid having SEN (who need a proper assessment), or questions about their neighbour’s extension infringing on their land (who need a proper lawyer / surveyor) etc etc

Well I know nothing about pensions and sadly im not clever or motivated enough to get a job earning even a quarter of that. So my only advice is ignore all mean comments and get a financial advisor or tax advisor. Seriously, I think well done for working so hard and enjoy the benefits your lovely big salary can bring you!