maxed out pension

[CatherineHeathcliffe]

Namechanged since I suspect I might be about to get flamed.

If you are maxed out on your pension (in terms of tax free sum) would you continue to put money in?

I own my own business and currently make a company contribution only into the pension each year (generally the max with then a small income by PAYE and dividends).

You don't know what the tax rules or allowances will be when you retire, unless it's imminent, I would just keep paying in if it's tax efficient now you can't second guess it. Or just put it in a high interest rate account now but that won't be tax efficient.

I wouldn't put more money than necessary into a pension because both life and pension rules can turn on a dime.

Your money is locked away for many years, the age at which you can access it likely to be raised even further, and as you are probably quite comfortably off to be in this position, the recent changes making pensions now part of your estate for inheritance tax are likely to be relevant to you.

I am medically retired due to disability and "fortunate" enough to have been able to get my public sector pension released early, however I know that this is not the case with many private schemes, and people can be left high and dry should anything happen that means you are unable to work before whatever age the pension becomes accessible.

It's only another month or so until the new tax year starts so I would just wait until then.

As others have mentioned, both ISA and pensions can also be set up for children if relevant.

The question isn’t about whether to put more money into the pension this year though. The question is whether, in a situation where I no longer benefit from taking out 25% tax free because I’ve hit the max, it’s still worth growing then pension pot when taking into account the fact that I’m a single person company taking a company pension contribution of £60k per year and saving 25% tax on that.

So you don't pay any income tax?

What? Of course I do

We pay into our children’s pensions as both ours are maxed out

OK I understand the question now.

I think it depends on what tax bracket you expect to be in when you retire, how long you expect to live and your position on estate planning/inheritance tax.

Whilst it is an enviable problem to have, a lot of people are now finding that they have stuffed their pension to the gills and now face a substantial tax liability either on drawdown or around inheritance tax.

We're in the same situation and it's not worth putting any more into the pension IMO.

After ISAs the only option is GIA. Yes you have to pay tax but you only pay tax on profits so you're still better off. Just keep using your CGT allowance every year within the GIA.

I think we’ve basically come to the conclusion that we are best to keep adding to more due to the corporation tax advantage but not adding anything else to DHs (he is tapered anyway)

That’s correct. Follow the £

If you put the £ in your pocket, what is it worth?
If you put the £ in your pension, what is it worth once it eventually arrives in your pocket

Apply the tax journey to each route (corp, dividend v tax free then PAYE) Compare.

It’s not the same as those that don’t pay corp, so a different calc.