Person centred planning: Pension caps

Author: Mike Fosberry, James Kirk (

Categories: Getting advice, Personal Finance
Tags: pension, pension cap
Person centred planning for pensions would explore more options for people who have reached their pension cap. Mike Fosberry explores these options in this TV show.

Person centred planning for pensions

If they're maximising their annual pension contributions or they've had to apply for protection, one of the issues with protection is that once you've applied for protection, you can't pay future pension contributions. So it is another issue which we're trying to deal with at the moment because if you're a member of an employer’s pension scheme where under the terms of your contract your employer makes pension contributions on your behalf. You may be in the situation where you're telling the employer, “Don't pay any more pension contributions because I have this protection in place.” The supplementary question is, if you're not paying it in pension contributions, what are you going to do with that money? And are you going to add it to my salary, etc? So we're involved in quite a lot of negotiation between employees and employers in terms of determining what happens in those circumstances. But for people who are saying, “Right, I can't pay pension contributions or I'm very restricted with what I can pay.” The issue then is what should I do? And the concerns there will be is it going to be as tax efficient as a pension contribution? Quite honestly, there's nothing quite as tax efficient as a pension contribution. But you've got other tax advantaged investments such as individual savings accounts where husband and wife can put in almost 23,000 between them into tax advantaged investments, investment profile. And beyond that it rather depends upon the amount of risk that people are prepared to take in terms of where they invest their money. So again, part of our job is guiding them through that process and making sure that they're taking an appropriate level of risk in relation to their affairs and also their attitude to risk.   If you enjoyed this TV show about person centred planning and options for people who have reached their pension cap, please browse more videos and briefings on Inside Finance TV.  
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