Company Director - no pension

Age:
33
Spouse’s/Partner's age:
30

Annual gross income from employment or profession:
E70,000
Annual gross income spouse:
E35,000

Type of employment:
IT contractor (own LTD company) and Recruitment

Expenditure pattern:
I dont put an amount away each month but generally put lump sums into savings account

Rough estimate of value of home
E305,000
Mortgage on home
E175,000
Mortgage provider:
NIB -LTV
Type of mortgage: Tracker, interest only, fixed rate
Tracker
Interest rate
4.76% 18 years left

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month?
Yes

Savings and investments:
A total of about 65K in savings, split over 4 accounts

Do you have a pension scheme?
No
Do you own any investment or other property?
No.

Ages of children:
10 months.

Life insurance:
Yes.

What specific question do you have or what issues are of concern to you?

Im concerened that neither of us have a pension but unsure where to start. I would rather manage it myself with an investment property and clear my own mortgage ASAP. Should i start a pension now, are there any advantages being a Director of my own company?

My own situation is not too dissimilar to yours (IT contractor as well). I started a pension trust 3 years ago, it's called a Self Directed Pension Scheme.

Basically, depending on your age, you can lodge an increasing percentage of your salary to this trust, paid gross from your company profits ! So for example, lets say your company has 20K over and above your salary etc. Rather than take that out as salary and pay all the associated taxes, you can transfer it into your pension trust.

The 65K you have been putting away, would have been over 100K if you had transferred it directly from your company into your pension trust. I don't know if there is a way of getting that back into the company, so you can transfer it (best see your accountant).

The benefits :

• The transfer of money into the Trust will not result in a personal tax liability for the individual.
• The individual is the sole beneficiary of the Trust. The assets of the Trust cannot be accessed by creditors in the event of company failure.
• Current profits and retained earnings in the company can be transferred into the Trust for the benefit of the individual.
• The Trust can invest in areas of personal interest to the director including property, private companies, equities, gilts, tracker bonds, deposits, investment funds, etc.
• All investments grow free of Income Tax and Capital Gains Tax.
• The involvement of the director in the management of the Trust depends entirely on the level of personal interest. It can be a hands-on or hands-off arrangement. Investment expertise is not necessary.
• Benefits can be drawn directly from the Trust at retirement commencing at age 50.

And should you croak it before benefitting from it, it is transferred into your estate, which is nice....

You can invest in property/shares or a bank account. There is a list of what you can't do with it (paintings etc).

You can stick in a lump sum when you want and are not under pressure to do so each year or for the same amount.

I am including the link to the crowd I have mine with, but you should talk to your accountant in any case.

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