Is my work pension the best use/ investment of my earnings

[PensionPotHead]

I have a p/t job. I earn £1100 a month after tax and NI, although I don’t think I pay tax. My co. pays 12% of my salary into my work pension, and I am able to pay 80% of my salary into my work pension, about £850. The govt. pays 20% I believe into the work pension on top of this.

I’ve worked there 4 years, building up to my current hours, and the pension pot is now £33,000.

Anything left over at the end of the month I pay into a stocks and shares ISA.

I want to work until I am at least 62, I am now 54. I am paying NI and I have 8 more years to contribute to my state pension to get the full amount.

We also pay £250 into another pension for me, currently standing at 27K

What I’m asking here, is as follows. Based on what I’m investing, is this the most efficient/ best way/ am I maximising what I can generate in my pot?

Assuming you’re UK, anything over £12570 is taxed at 20%.
Your salary is £1100 month before reductions?
Assuming yes, you earn £13200 before tax, but you make pension contributions before tax which brings your taxable income below the 12570 threshold.

This is all good from the tax perspective.

On the investment side, are you able to manage which funds you’d like to have your pension invested in?

General advice is the closer you get to retirement, the less risk your pension management company will take with your ‘pot of cash’.

If they offer you a range of funds you may wish to try medium or high risk funds but you could lose money of course.

£1100 after reduction's.

Your contributions are possibly higher than permitted at present. Sorry if this sounds overly technical.....

The £850 and £250 contributions you allude to seem to be the same as your relevant earnings, and that's before your employer contributions of 12%. That is only permitted if you have some brought forward "allowance" from the 3 previous years.

You may actually be liable to a 20% tax charge on some of the £250 you pay into your PPP. (This may be getting relief at source that it's not fully entitled to!).

I assume your living expenses are met by a partner's income? If your partner is a higher rate tax payer it would be more tax efficient for you collectively if the £250 monthly contribution goes in to their pension pot. It may achieve greater tax relief for them (ie at 40% or 45%) and avoid a small future tax charge for you.

Alternatively, just pay the £250 you put into your PPP into your existing ISA for tax free growth and tax free income in retirement.

Worth making sure that you are benefiting from the government 25% as most work schemes just take the money as gross from your salary so you don’t benefit on the last 12k or so.
if this is the case then just use up your allowance through a SIPP.

I would agree that you may be paying in more than your total pay by the time you add I. The employer payment etc.

You’re allowed up to £40000 a year in contributions ( though I think thats combined employee and employer ? ) and then you can , in any one year , use the unused contributions of the last 3 tax years to overpay the £40k limit, say if you were made redundant but had a very generous payout and wanted to chuck it tax free into your pension.

That's not quite right @tanstaafl .

The amount you can get tax relief on is restricted to the LOWER of your UK relevant earnings or £60,000 in the current tax year.

I used to work in the public sector, and spent the last couple of years paying as much into my workplace pension as was possible. More and more, the closer I got to my retirement date. Until one day Payroll contacted me and told me I'd reached my limit. By 'limit' they meant that if I paid in as much as I wanted to, I'd be paid less than Minimum Wage that month, and they couldn't allow me to do that! I tried to convince them I was aware of that, and I didn't mind, as I'd only 1 more month to work, but they weren't having it.
Maybe a chat with your Payroll team would be useful.