Retirement Fund, Savings Acc or Pension?

Lesley_Allan

Bit of background, I will be 24 this week and for the past 4 years I have worked as a contractor and looks like this may continue to be the case for the next good few years anyway,

I realise that because I am not employed through a company that I do not have any benefits with regards to a pension etc.

Do I really need to take out a personal pension plan?
Or can I just continue to save regulary into my BOS Savings Account that I have set up as retirmenet fund which I pay into everything month and dont take anything out.

Is this ok to do it this way?

any help is much appreciated.

dunstonh

Do I really need to take out a personal pension plan?

Do you want to plan for your retirement efficiently?

Or can I just continue to save regulary into my BOS Savings Account that I have set up as retirmenet fund which I pay into everything month and dont take anything out.

Just about the worst way of "saving" for your retirement. It's not tax efficient and has limited growth potential (subject to inflation risk and shortfall risk). By using this account, you are going to have to contribute around 3 times more than you would if you paid into a pension.

Its better than doing nothing but you are making it hard for yourself. You probably need to be looking at paying around 20% of your income into this to match the same sort of benefits that around 8% net would pay if you used a pension and a balanced investment spread.

Lesley_Allan

Ok thanks, not really clued up on these things at all so looks like i better seek a financial adviser to sort out the best pension for me.

Emmamumof2

A pension would be more tax efficient as you get basic tax relief of 20% on the contribution from the government so if you decided to pay £80 the actual contribution to your pension would be £100. If you are a higher rate taxpayer you can claim additional tax relief via your self assessment form.

Saving via a bank for retirement isn't tax efficient at all.

An ISA would be an alternative if you still wanted access to the funds in case of an emergency as the funds grow tax free subject to annual allowance limits.

ozzage

Do you have your own limited company? If so it's extremely tax-effective to have your company pay into a personal pension for you. Not all only do you get all the income tax advantages, you also save a little on national insurance contributions.

I suggest you do what you said and go and see an IFA. Then come back and post what they say

It's excellent, by the way, that at 24 you are already paying into a retirement fund! Well done.