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Company pension (contribution-matching) vs ISA
BrunoM
Posts: 1,722 Forumite
Hi all,
I realise there are tax implications post-retirement to having a large amount in a pension scheme, vs nice-and-simple ISA money. I have tried to read around this on these forums and have at least a basic grasp maybe!
My new job's pension scheme is - I can contribute up to 6%, they will match it and add another 3%. I.e. I put in 6% before tax, and receive 15% into the pension, and at this point get 40% tax relief on that 6%.
Plugging my numbers in, I think this means I would be losing 141 pounds from my net pay, but getting 587.50 of pension, each month if I went for max contributions.
I have (as yet) no idea of where the pension money is invested and what its expected growth is and all that stuff, but I don't suppose its likely to make a big difference to any decision.
Does anyone think I am wrong in saying, despite the later tax implications I should be taking full advantage of the scheme because the company contribution way more than outweighs the tax I am likely to pay at retirement?
(the only caveat would be, I obviously want to have "some" savings immediately available throughout my life, so if putting stuff into a pension meant I had nothing to save in ready money at all, I might need to think about that).
Just craving validation! Thanks
I realise there are tax implications post-retirement to having a large amount in a pension scheme, vs nice-and-simple ISA money. I have tried to read around this on these forums and have at least a basic grasp maybe!
My new job's pension scheme is - I can contribute up to 6%, they will match it and add another 3%. I.e. I put in 6% before tax, and receive 15% into the pension, and at this point get 40% tax relief on that 6%.
Plugging my numbers in, I think this means I would be losing 141 pounds from my net pay, but getting 587.50 of pension, each month if I went for max contributions.
I have (as yet) no idea of where the pension money is invested and what its expected growth is and all that stuff, but I don't suppose its likely to make a big difference to any decision.
Does anyone think I am wrong in saying, despite the later tax implications I should be taking full advantage of the scheme because the company contribution way more than outweighs the tax I am likely to pay at retirement?
(the only caveat would be, I obviously want to have "some" savings immediately available throughout my life, so if putting stuff into a pension meant I had nothing to save in ready money at all, I might need to think about that).
Just craving validation! Thanks
0
Comments
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Bite their hand off,0
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Any vacancies?
Honestly- this is FREE MONEY. I'm sorry F R E E M O N E Y ! ! ! ! !
Every month you let this slip you are losing out big time.
By all means find out more details on what/where it is being invested. Is it final salary ( In which case MAJOR WOO HOO!!! ) or money purchase.
Either way - nothing you can do on your own can beat this.
Best
Troubleatmill0 -
Thanks much all, I had the impression that was so but I got a little bogged down trying to get to grips with the potential impacts in 35 years etc etc. Max contributions inc as soon as I'm eligible (another month or so yet).0
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