Please note: The Auto-enrolment sub-board is now closed. If you have a question around pensions, please post in the Pensions, Annuities and Retirement Planning board.
New Company - best way for a pension
da4
Posts: 17 Forumite
Hi all,
Just a quick question.
I have changed jobs and I'm now in my works auto enrollment pension, to which they are contributing 3% of my annual salary.
I currently put about 9% into an S & S ISA each month which I am using as a pension but should I be putting this into my pension fund instead? I know we get 20% tax relief extra but does it work out better for tax for these contributions? Is my NI and Tax deducted after the contributions are taken or after still ?
I'd like to keep adding a little into my ISA just as some money I can access but only 1% per month.
Thanks
D
Just a quick question.
I have changed jobs and I'm now in my works auto enrollment pension, to which they are contributing 3% of my annual salary.
I currently put about 9% into an S & S ISA each month which I am using as a pension but should I be putting this into my pension fund instead? I know we get 20% tax relief extra but does it work out better for tax for these contributions? Is my NI and Tax deducted after the contributions are taken or after still ?
I'd like to keep adding a little into my ISA just as some money I can access but only 1% per month.
Thanks
D
0
Comments
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If you contribute to any pension, then you get tax relief back - free money.
If you contribute to your company pension up to the amount that guarantees a maximum company contribution (some companies match what you put in up to a certain amount) - free money.
If your company offers salary sacrifice for your pension contributions, then I believe it reduces the amount of NI/tax you pay, because you are effectively "being paid less" (because the extra is going into your pension).
So pensions are good - although ISA's also have their good points, such as accessible at any age, and tax free whenever you want to get the money out, whereas pensions only let you have 25% tax free, and lock your money up until you are 55 (or older in some cases).0 -
This sub forum gets very few visiting it. It is best to post in the main pensions section.I currently put about 9% into an S & S ISA each month which I am using as a pension but should I be putting this into my pension fund instead?
Pensions and ISAs can share the same investments and same charges. So, the only difference is the tax and maturity process. Whether ISA or pension is best largely depends on your tax position now, in the future and your objectives with the money.I know we get 20% tax relief extra but does it work out better for tax for these contributions? Is my NI and Tax deducted after the contributions are taken or after still ?
If your company is using salary sacrifice, then its not just tax relief but also reduced NI you are paying. If they are not using salary sacrifice, then its just tax relief.
You should always maximise the free money from the employer. Some employers will go above and beyond the minimum and match to higher levels. Nothing beats free money.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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