6 minute read
Financial Matters
from SE23 October 2022
by SE Magazines
With Akwasi Duodu | akwasi@sterlingandlaw.com | www.sterlingandlaw.com
Lump sum v regular pension contributions; which is better?
Pension plans are one of the best ways to save for the long term. For starters, you get pension tax relief on your contributions. This means that you get a top up from the government, so it effectively costs you less to save more. In addition to that, your pension contributions are typically invested for the long term in a portfolio of stocks and shares. Anything you pay into your plan has the potential to grow and benefit from compounding. Growth within a pension plan is tax free. If you had a workplace pension, your employer would have to contribute to your pension too. Your employer may opt to match your pension contributions. This top up to your pension is effectively a pay rise of sorts and worth having.
Is it worth increasing my pension contributions?
The answer to this is generally yes, especially if affordable. This may not be a priority for you if you’re younger, say in your twenties or early thirties. Increasing your contributions at a younger age would however have a greater impact on the end result than if you were older. Increasing regular contributions is more common than paying in a lump sum. Your employer may also match your contributions if you increased them via your workplace pension – but do check with them as most employers have limits. The other thing to check is that you don’t over contribute as there are annual limits to how much you may contribute to a pension in a tax year. This is known as the pension annual allowance.
Paying a lump sum into your pension
Investing a lump sum into your pension would potentially have the greater impact. This is because the entire sum invested would be set to work immediately. Conversely, a regular contribution would have to be fed into the market over a much longer period. Investing at regular intervals as opposed to all at once would however reduce the impact if the market fell. Whilst investing at regular intervals may be the lower risk option, markets tend to recover in the long term. Either way, just make sure the amount you’re paying in doesn’t take you over your annual allowance, which is currently set at £40,000 per year, but might be less if you’re a higher earner or have already started taking money out of pensions savings.
Which is best?
This all depends on your personal circumstances. If you found yourself with a sudden windfall such as an inheritance, a work bonus or tax refund, paying it into your pension plan would help you get closer to achieving your retirement savings goals. Putting a work bonus into your pension could also mean that you saved on tax and national insurance deductions, meaning you’d get to keep more of it in the long run. This boost together with the lump sum invested would be set to work immediately. Ultimately, the best option would be the one you could stick with. Both options would allow you to grow your pension pot in a tax efficient manner. A canny combination of both options could be the best way forward. If, however you’re paralysed with indecision, or need help determining how much you’d need to contribute, speak to an independent financial adviser.
Alleyn’s Junior School
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Alleyn’s Junior School offers co-educational excellence in a caring community for children aged 4-11. Open Events will take place in October and November 2022 for 4+, 7+ and 9+ entry in September 2023. www.alleyns.org.uk
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Wednesday 19 October: Chener Books Poetry Month 3
7:30pm - 9pm. Chener Books is hosting a series of four poetry readings throughout October, to celebrate National Poetry Day. On Wednesday 19th October Ella Frears, Will Burns, Maurice Riordan and Rushika Wick will be reading. Tickets can be purchased at www.eventbrite.co.uk. Chener Books, 14 Lordship Lane, East Dulwich.
Wednesday 19 - Saturday 22 October: Romeo & Juliet
8pm -10pm. Directed by Yohann Philip. ‘Two households, both alike in dignity, in fair Verona, where we lay our scene, from ancient grudge break to new mutiny, where civil blood makes civil hands unclean...’ On a London high street, two rival businesses are locked in a violent struggle for supremacy, while young lovers defy their families to follow their passion. Join us for an exciting, contemporary, and immersive adaptation of Shakespeare’s most famous tragedy. Performance dates: Wednesday 19th to Friday 21st October at 8pm., and Saturday 22nd October at 3pm and 8pm. Venue: Edward Alleyn Theatre, Dulwich College, London SE21 7LD. Tickets at: www.ticketsource.co.uk/dulwichplayers
Wednesday 26 October: Cooking with Scissors
6.45pm-8pm. An opportunity for local business professionals to meet, make new contacts and gain new business. The last Wednesday of every month. Free Admission. To find out more or register www.cookingwithscissors.co.uk/ The Lordship Pub, 211 Lordship Lane, SE22 8HA
Thursday 27 October: Chener Books Poetry Month 4
7:30pm – 9:00pm. Chener Books is hosting a series of four poetry readings throughout October, to celebrate National Poetry Day. On Thursday 27th October Sophie Herxheimer, Arji Manuelpillai, Clare Pollard and Natalie Linh Bolderston will be reading. Tickets can be purchased at www. eventbrite.co.uk. Chener Books, 14 Lordship Lane, East Dulwich.
Friday 28 October: John Kirkpatrick, John Haseler, Trista Selous
7pm – 11pm. We are delighted to be welcoming John Kirkpatrick back to The Goose Is Out! this time solo! John is one of the most prolific figures on the English folk scene, performing solo, in duos, acoustic groups and electric bands, and has established an enviable reputation as an instrumental virtuoso (melodeon, Anglo concertina and button accordion), as well as a leading interpreter of English folk music. He is also very funny! We think he is brilliant! Support tonight is from two excellent but very different local singers, John Haseler and Trista Selous. Expect a very interesting mixture of songs, probably including the UNexpected! Venue: The Ivy House, 40 Stuart Road, Nunhead, SE15 3BE. Tickets can be purchased on:
www.wegottickets.com/thegooseisout
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Alleyn’s School
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We offer a range of scholarships and means-tested bursaries. For more details, and to learn about life at Alleyn’s and our next Open Event dates, please visit our website. www.alleyns.org.uk
