1200 pounds a month - Where to save?

Primrose

If I were in your position, your age and a 40% taxpayer I would certainly not waste the tax benefits of paying money into a pension scheme now, especially as you appear to have very little pension provision to date and have effectively lost 20 years of potential pension contributions paid into any fund. You will undoubtedly find that the closer you get to retirement, the more preoccupied you will become about what kind of life you're going to be able to afford from the proceeds of this fund, so don't allow yourself to be fooled by the fact that retirement is still far off for you and pay as much as you can afford to into a pension now while you're a 40% taxpayer. So I'd pay at least 50% of your monthly affordable savings into your pension.
I'd use the remainder, as a priority to build up an "emergency savings account" of between three and six months living expenses. The economy is getting difficult and if you were to lose your job you would definitely need funds on which to draw until you could find new employment.
Once your emergency fund is at your required level, I'd use surplus savings in cash ISAs or equity ISA (or a combination of both), depending on your attitude to risk. If you opt for equity ISAs I would think that five years is the absolute minimum you would need to be invested, especially the state the stock market is in at the moment.
I'd

greggymagic

Thanks Primose

Just curious but why have I effectively lost 20 years of potential pension contributions. I know it's never too early to start planning for future but are people really starting pensions when they are 11?

I was thinking of a 3 way split - pension, mortgage overpayments and savings (either ISA or normal savings account).

Cheers

Primrose

Whoops, sorry, I misread your age. Compared with much of the working population who start working around the age of 20, you've probably lost about 11 years. You've probably selected a reasonable compromise and if your financial circumstances change, you can always reallocate the proportions you pay into each at a later date. With any share-based investments it's probably a good idea to put extra money in at times when the share.unit trust prices are depressed as you get more units for your money and gain the benefit when the market improves and price rise.