NI Contributions as a Poker Player

[JGill_DTD]

Am I right in thinking you cant set up a private pension then claim a state pension, in which case it probably isn't worth making NI contributions if that's the road I'm going down?

[OverTheBorder]

As arb said, don't bank on the state.

If you pay the £2,880 into a SIPP you will get taxes on the way out either via an annuity or freedom lump sum (25% tax free atm) the free money at the start is notional tax relief. The tax applied will be to everything including your profit. I don't think its a hugely beneficial arrangement for non tax payers. I could be wrong but ISAs seem better. No free money but they can't tax my profits at marginal rate and I am not locking it away for 50 years.

SIPPs would have limited appeal for this level of contribution. Basic personal pension would be cheaper to run.

[dwayne110]

Nope, you can have private pensions and the state pension - the state pension is associated with your lifetime NIC contributions - not your other income sources, nor your level of income. Private pensions are in essence a long term form of savings which historically come with tax reliefs / incentives I.e. So are usually encouraged by the government ; taking away state pension eligibility would be a rather big (and unfair) disincentive

[OverTheBorder]

Nope, you can have private pensions and the state pension - the state pension is associated with your lifetime NIC contributions - not your other income sources, nor your level of income. Private pensions are in essence a long term form of savings which historically come with tax reliefs / incentives I.e. So are usually encouraged by the government ; taking away state pension eligibility would be a rather big (and unfair) disincentive

Pension Credits are means tested though. A cynic would wonder if auto enrolment is designed to slowly wean the country off state pensions. Although at minimal permitted level it's not going to buy many lamborghinis

[Doobs]

Nothing to stop you putting £2880 pa into a Private Pension JGill, currently HMRC top this up to £3600, free money's worth getting?

This sounds ideal, any links or ideas as to where is best to set this kind of thing up?

pretty sure if you head into your bank they will be able to point you in the right direction? might be wrong. been debating starting one myself recently

I wouldn't be rushing in to a bank to get financial advice.

[Doobs]

I wouldn't be assuming state pension rules are going to be the same when you retire as they are now.  The rules have changed multiple times while I have been working. 

NI contributions to buy state pension are normally good when you are old, but the above paragraph should mean that you are better waiting rather than buying them right now.  They are better value when you are older anyway. I assume we are talking what is good for young people. 

I think saving is good, as it is a good habit and should stop you blowing your entire life roll.

Yong people should't rush in to a pension when you aren't getting employer contributions, that can wait.  Most of the tax relief gets taken back when you take a pension unless your pension fund is small.

There really isn't any need for an ISA if you don't pay tax, but I'd probably just start one anyway.  If you get v rich due to picking up incredible tekkers from Pads, you might end up paying capital gains tax.  If your shares are in an ISA this won't be an issue.  You can always switch this money in to a pension later if at some stage that becomes beneficial.

As others have said, having a private pension is no barrier to having a state pension.

If you have debts, pay them first.

FWIW ISAs aren't without drawbacks.  If you find your self in bustoville, then your iSA is going to get taken in to account in situations where your pension isn't.  But the flip of this is you have some cash to spend before you have to claim benefits. 

Also ISAs and pensions have charges, if you have only got a couple of thousand or so, you are better just shoving it in a bank account with the best interest rate you can find.

If you are intesrested in shares, I'd start by reading something like fool.co.uk or moneysavingexpert

[JGill_DTD]

Not really interested in shares, feel like I gamble enough with my money as it is.

The only debts I have are student loan, but good thing about those (personally) are that you only have to pay them back when you are earning x amount and they only charge a %age of what is earnt (meaning I figure I may as well try and fade it whilst I am able to as inflation continues and end up paying it back when it costs the least amount to do so as the student loans don't increase over time). Is this going to give me greater barriers further down the line when I come to look for a mortgage or whatever? (Not sure when that will be, but def not near future).

[The Wycher]

I would recommend speaking to an IFA who can find the best ways for you to save/invest. I also would not go via the banks as any financial advisers they have will be tied to the banks products.

Best way to find an IFA is via recommendations from friends and family as you will be trusting them to some extent. A good IFA will keep an eye on your investments moving forward, but in my experience you should be wary of those that move your investments regularly (they will potentially get a fee every time they move) and also any investments that sound to good to be true.

[mikeymike]

IFA,s - the ruling changed last year i think and all IFA,s should be charging a flat fee on the money that the invest on your behalf typically about £3/4k for every £500k invested - one thing to check when picking an IFA is to see if they have a client account - if they have a client account it eases transferring money directly to them for investment.

+++++ Give up poker and become an IFA - the 3 i know all earn high six figure sums and work a couple of days a week

[doubleup]

- the 3 i know all earn high six figure sums and work a couple of days a week

That would be an extremely good reason to avoid them

[mikeymike]

Not really they all provide a good service and work smart - if they are making you money you don't begrudge them making money -

[Doobs]

Not really they all provide a good service and work smart - if they are making you money you don't begrudge them making money -

spits coffee out

[doubleup]

Don't want to derail too much but there is no evidence that IFAs are any better at stock/fund picking than a pin.  So if they are earning the figures you quote they are either grossly overcharging or involved in suspect areas that will no doubt be in the papers when it goes tits up.  

An IFA charging an hourly rate about the same as any other professional for basic financial planning advice is well worth the money, specialist mortgage brokers prob worth it as well if you are at all non-standard.

However the best advice to anyone is to educate themselves in investing and personal finance and the options.  If you ever become rich enough to require tax planning a specialist chartered accountant should be fine. Stockbrokers prob best for discretionary investment management.

[vegaslover]

Not really they all provide a good service and work smart - if they are making you money you don't begrudge them making money -

spits coffee out

This unfortunately.
In my experience a little footwork yourself and you can find same/better deals than an IFA can, without having to pay their wages

[mikeymike]

Just to confirm - when i used the word all - this related to these 3 guys - also they only handle portfolios over 500k -