directors pensions

[yob]

hi,
my pension company says i can put max 18k into my wife and i,pension as a top up as company directors,by doing this it tightens the cash flow of the company and in parts of the year put us in overdraft,i'd like to take the benefit of the pensin top up as we've only being paying contrabutions for the last few years of 12k a year each.would i be crazy to tie up the cashflow of the co' into pensions,or should i take the tax benefit??
age 43/42 cheers

 

[podowd]

is your business making a profit? if so it would make sense to put a lump sum into a pension fund rather than paying Corporation Tax on your profits (and income tax on your dividends). However, if this is going to put your company bank account overdrawn you need to weigh up the cost of the overdraft versus the saving on the corporation tax to see if it's worth it.

aside from the potential saving to the business, you need to assess what your own priorities are in relation to pension planning.

you say it puts you overdrawn "in parts of the year", you should leave it until the year-end and make a lump sum payment into the pension fund.

if you have a good accountant you need to discuss it with them, don't act purely on the advice of your pension advisor as ultimately their job is to sell you a pension!

Regards

podowd
www.prima.ie

 

[yob]

thanks podowd,
yes the co' is making a profit,so it makes sense to invest in pension,so the q. is does it pay to invest in pension,pay less corp'tax,dividends,but pay bank fees for overdraft.
my pension priority is to build a sizable nest egg to give my wife and i a respectful old age.
i asked the pension co' for the max lump sum i could invest to maximise tax benefit,nice if you can afford it.i supose i'm just a little frightened to bury such an amount of money for such a long time,at the same time i know i need to make such large contrabutions to have a decant pension.
thanks again yob