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I was comparing the US DC (401k) vs say the UK (A Group Personal Pension or a SIPP).
by walshemj 7y ago
I was comparing the US DC (401k) vs say the UK (A Group Personal Pension or a SIPP).
- lotsofpulp 7y agoBased on some quick Googling, I don't see what is so much better about an SIPP or a group personal pension plan? SIPP offers some kind of matching from the government, but it doesn't seem significant.
- nguoi 7y agoI don't know anything about the 401k system, but the money going into my pension is from my gross salary. Combined with high taxation, it means that it's worth up to twice as much going into my pension as it would be going into my bank account. SIPPs are beyond my lifestyle.
- lotsofpulp 7y agoIt's the same in the US.
- walshemj 7y agoMain one is Tax relief at your highest rate on income tax you get an extra 20% into your pension - if your a higher rate tax payer you can reclaim the extra tax relief. For a higher rate taxpayer you put in £60 and get £100 in your pension. You can also do salary sacrifice and reduce you income tax and NI lability
- sokoloff 7y agoUnless your retirement tax rate will be lower than your working years rax rate, it comes out in the wash eventually. It's quite likely that some people today will end up paying higher income tax rates in retirement than today.
- walshemj 7y agoId like to see that worked out in detail have you got an example? unless you mean you bust the lifetime limit, which is just bad planning. And you can use drawdown to manage your income from the pension and you would of course make use of income from your ISA.