[steve_gh]

Quite frankly, you are hugely privileged to be earning at that level. The median average salary in the UK is just under £26k.

Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k. SO if you are doing the sensible thing and putting money into a pension, the threshold you talk of is effectively at a £140k salary.

[orlp]

> Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k.

It also reduces your actual salary by £40k, not just for tax purposes, if you'll never end up using your full pension. Either because you've died before doing so, or because the pension fund can't pay you out (fully) since it is increasingly underfunded due to a rapidly aging society.

Answer this honestly for yourself: if you are fairly young, say 25-35, what are the odds you'll see more money in your lifespan from £40k put into a pension now that may or may not be fully available after retirement, versus £40k minus tax invested into an index fund and accessible/reroutable whenever?

[Nursie]

Pension funds that are contribution based can't be underfunded, pretty much by definition.

> a pension now that may or may not be fully available after retirement, versus £40k minus tax invested into an index fund and accessible/reroutable whenever?

If we're talking about people putting that 40k into a pension because the tax on going over 100k salary is too much, you've saved 21k straight off by not taking it as salary. So we're talking about 19k in your hand vs 40k in a pension.

The pension fund you contribute to now could just be an index fund (it may be a managed fund though, depends what you pick), and as we have moved away from final salary pensions, there's no danger of underfunding because it's basically just a tax-shielded investment.

So the answer is, assuming you live to retirement (or even to 55, the age where you can take a tax free lump sum from your pension in the UK), that 40k invested in a pension is likely to be a lot better for you than 19k in a similar fund that's not tax-shielded.

And it's more likely to be there when you need it later in life because you won't be able to dip into it during your working years.

[JonChesterfield]

Seems potentially relevant that some pension companies were looking at defaulting from margin calls this week. I'm not totally confident that money put into pension schemes is going to be there later.

[cbeach]

Yes I do pay plenty into my pension.

It's not my "privilege" to earn at that level. I was born into an average economic background. I worked really hard at school and university, and then over a period of seventeen years, I worked really hard in responsible jobs.

If all people from average backgrounds took the attitude that only "privileged" people get good careers, then unfortunately it would be a self-fulfilling prophecy. Luckily there are plenty of aspirational people in the UK looking to better their family's situation by advancing their careers.

[chimprich]

> Yes I do pay plenty into my pension.

Then it's not really a 60% marginal tax rate, is it?

> I worked really hard at school and university, and then over a period of seventeen years, I worked really hard in responsible jobs.

Educated by the state, health taken care of by the state, protected by police and emergency services, defended by the military, enjoying the benefits of scientific research, and lots of other things all paid for through taxes.

You did rather luck out having the combination of interest and talent that turned out to pay very well (as did I).

My wife is a nurse and works really hard, literally saving people from cancer, but she gets paid comparatively little because we don't pay enough tax to fund the NHS properly.

[tikkabhuna]

The poster you replied to was not saying you didn't earn it, they're saying you're in a privileged position now.

> having special rights, advantages, or immunities > Similar: wealthy rich affluent prosperous lucky fortunate special

[bigfudge]

Although worth noting that luck plays a much larger role on most peoples success than is acknowledged. Uk and Us are also much less likely to recognise use role of chance in personal success than wealthy Europeans.

[Al-Khwarizmi]

If you lived in a dysfunctional country without public services, you wouldn't have been able to do all that, though.

You took more benefit from the system than others, regardless of whether it's by merit, it still makes sense that you pay more back.