Pension or saving?

emmpccs · 22 August 2014 at 4:26PM

Hi everyone. I have just registered and am looking for advice. I am 50yrs old with a frozen pension of just £28000. I have not been in a position for a very long time to add to this but now, I can. I have a lot of time to make up. I cannot find any reference to whether I am better off, at this late stage, putting £400 per month into a savings plan or if it would serve me better in a pension pot? I am working on a 20yr plan. Does anyone have any advice please? Thank you!

atush · 22 August 2014 at 4:43PM

Let's see.

Savings 400*12= 4800 *20 years= 96000 plus whatever interest rate you find.

Pension, 400*1.25 = 500/m * 12= 6000 *20 = 120,000 This is w/o any investment growth, but 5% a year would be safe to assume.

So exactly how can you not see the pension is better over cash savings? After all, you could have the same 5% growth if you put the money into a S&S isa rather than cash, but you would not get the tax relief. The extra 1200 per year in tax relief and the compound investment growth means the pension would easily beat any cash savings or S&S isa savings.

What dies your employer do for a pension? How much do they put in? How much free money have you been turing down?

And your old pension isn't 'frozen'. It is mostly likely a DC pension invested and is growing each year along with the investments.

Pension or saving?

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