Should I save for a pension with Ing Direct

juliew6

I recieved,today in the post,an offer to open a direct savings account with
Ing Direct.The AER(whatever that is)is 4.5%.I can put monthly savings in from my current account(which is Barclays at the mo).Would this be a good idea to set up for pension savings? I don't have a pension yet as I am on a low income.Please someone tell me if it is a good idea to open this account for this purpose.Thankyou in advance.

$17mma

Hi Julie

Maybe you should post this over in the pension, savings thread. There are loads of MSE's that can pffer you advise and will letyou know if the pension is any good.

Glad

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [email="abuse@moneysavingexpert.com"]!!!!!![/email].

EdInvestor

It depends what you mean by a "pension", Julie.

If you just mean you want to save so that you'll have a pot of money which can then be used to provide you with an income when you're old, then you've got the right idea in looking for an account that pays a high return, like the ING one.

But you would be better to open an account called an ISA, which means all the money will mount up tax free and remain tax free when you take it out to live on when you're old.

There's another meaning of "pension".It's a tax wrapper, that you use with an investment.It's similar to an ISA, but with a pension, you get extra money put in at the front by the Government, and then you pay tax on most of it when you take it as a pension at retirement.

The money in a pension is invested - in shares or bonds or property, so it's more risky than a cash account, but this means it should grow bigger over time than cash would.
Do be aware that once you put money in a pension, you can't take it out again until you are at least 55 years old.