Private pension question from someone who is a bit dim

[miserableandworried]

I’d like to start putting some salary in to a private pension, nothing massive, just a couple of hundred a month.

What I don’t understand is if pension contributions are not taxed, but I am adding to my fund from salary, that has already been taxed, how do I get the tax back?

Or is that not the deal on private contributions?

If you are paying contributions out of net pay then HMRC will liaise with the scheme and top up the contribution so you get basic rate tax (20%) added. If you pay tax at a higher rate than that you can self assess and reclaim the rest.

Are you self employed? If so, as long as your private pension is set up for automatic tax relief, your contributions will be topped up by 20%.

If you're a higher rate taxpayer, you'd need to claim an extra tax relief you're due (above the auto 20%) through self assessment.

If you're employed you're likely better going via the workplace scheme to benefit from employer contributions too.

One a SIPP OP. Whatever you pay in the government adds to for you.

I’m trying to do this too…. If I ever get round to it. Mostly because I think my work pension funds are too conservative.

as I understand you get 20% immediately topped up directly I to your SIPP. For any remaining you need you have to do a tax return so there’s always a lag in getting that back. And so by the time you get it and contribute yourself into the SIPP it counts towards your next year relief in a weird cycle.

I’m employed and a basic rate tax tax payer.

Has your employer got a pension scheme and are you in that. If you pay extra into that the employer will too

The provider will do it for you- nothing for you to do. Nb it’s done by increasing the pension contribution- you don’t actually get given anything back.

It's brilliant, you pay money in and when you check, you find a bigger amount arrives Vs what you paid in! Pleases me anyway.

Employer schemes are different and even better if your employer contributes too.

Vanguard are a good company for private pensions, investing.

You say private pension, so do you mean a SIPP?

Or when you say private, you mean as opposed to government state pension?

Not always.

I paid extra into my company pension scheme because of the tax incentive and I was looking out for my own future.
My employer paid no more.

Then it is probably best to join your employer’s scheme as they will usually have to contribute too.

Their scheme could be set up in one of two ways. Either your contributions are paid out of net pay and then are topped up by HMRC, or they can be deducted out of your gross pay before tax is taken. That gets you to the same place if you are a basic rate tax payer, just by a slightly different route.

I don’t know if I mean SIPP. I’m not sure about anything 😂

im in the company nest pension that I think is set up by the government, but I wanted another as I can’t increase my contributions to the company one.

If you have a personal pension (SIPP or similar) then it is likely you get tax relief at source. That means the pension will automatically be topped up by the basic rate of tax. So you don't need to do anything, If you are a higher rate tax payer you will need contact HMRC to get the higher rate refund, or do it through your tax return

It’s probably worth checking with NEST whether you can make one off contributions. Their website suggests you can, but they’ll be able to confirm. NEST is a scheme which gets the HMRC top up on contributions so any extra payments you make in out of your net pay should be topped up.

Some people want more investment flexibility than you can have via NEST so set up a different arrangement, but as a starting point keeping everything in one place so you can start saving more while you figure things out could be a good idea.

Good idea to top up if you are only in a Nest scheme (as you say, they are not very generous).

I would personally start a separate pension with a different provider. Someone has recommended Vanguard, and there are some other names as well as general info here. https://www.moneysavingexpert.com/savings/discount-pensions/#start

Thanks everybody