Pensions or Premium Bonds?

pasha_2

As a 40% taxpayer and having paid into a few pensions for over 20 years, am I better continuing to pay into them, or should I start to buy premium bonds? Investing the same amount of money each month, instead of paying into the pensions, which not surprisingly haven't performed well at all.

dunstonh

I better continuing to pay into them, or should I start to buy premium bonds?

Are you better off getting 40% tax relief, tax free growth and long term investment growth or going into a lottery with an average win rate that would typically see you get 1% a year?

which not surprisingly haven't performed well at all.

We cant comment you havent mentioned the investments. Pensions dont perform either up or down. Its the investments within them that do that. 20 years should see you with a good enough return unless you are in an obsolete product.

jamesd

pasha, can't really suggest much without knowing which investments you're using within the pension, what it's worth, how much you're contributing, your age and what pension income you want. Generally though, 40% tax payers will be better off contributing anything up to 100% of their 40% money into a pension if they want income or the 25% tax free sum. It's also potentially a very tax-efficient way to pay off a mortgage.

Premium bonds are generally a terrible choice, with low returns. Occasionally not too bad for higher rate tax payers who have exhausted all other options, including all other NS&I tax free products.