Getting a private pension as well as company pension

ffacoffipawb

atush wrote: »

I would not do one, I would do both. having savings and a BTL now is great, but won't replace a pension entirely. So I'd open a PP with some, and use a S&S isa with some. How to split is up to you, but given your finances I would think you would want at least 10% overall going into a pension n.


For the simple reason that 80 into your pension will become 100. 80 into your ISA will be....80. Given the years from now to retirement, that extra 20 will give you very good compounded investment growth.


So do both for the best results long and medium term.

The 100 plus growth in the pension is taxed at the other end so is no different to an ISA really. Obviously the PCLS being tax free makes a small difference to a basic rate taxpayer. For a higher rate taxpayer, the pension route is more compelling.

atush

The compounded growth for 30 years plus, and the PCLS would make it worth it. Even at basic rate tax.


I never said not to have S&S isas, I just said both. If you say only S&S isas that would be as blind as me saying pension only.


They each have a part to play.

ffacoffipawb

atush wrote: »

The compounded growth for 30 years plus, and the PCLS would make it worth it. Even at basic rate tax.


I never said not to have S&S isas, I just said both. If you say only S&S isas that would be as blind as me saying pension only.


They each have a part to play.

The tax paid at the other end cancels out the tax relief at the start, that is what I was implying.

Basic rate taxpayer, with PCLS excepted of course.

80 with growth in an ISA is the same as 100 with growth in a pension after paying 20% tax on the pension proceeds.

jamesd

That's 80 in the ISA vs 25 at 0% income tax via reinvesting in an ISA plus 75 at 20%. Which is 80 vs 85. Which is 6.25% more income from the pension. With the proposed flat rate state pension only around £7,500 while the personal allowance is around £10,000 the first £2,500 of the pension income's 75 part is also tax free. The effect of that personal allowance varies but using 2009 numbers I worked out the effect on various income levels.

hsn

Thanks for all the input all, I think i'll look to see how much i can afford to lock away in a personal pension as well as the NEST pension my employer is providing. Anything else i have remaining i'll put away in a stocks and shares ISA - I'll look at that as a 3rd pension which i will plan not to touch until retirement but having the flexibility of getting at the stocks and shares ISA if i need to probably makes sense. My husband has a good pension from his company, puts the rest of his money into savings and a stocks and shares ISA, i'll follow the same route but given my company isnt quite so generous with thier pension i'll also get a private pension as well. if i misunderstood any of the advice please let me know. Thanks again for everyone's input.

jamesd

That seems like a good plan. Hopefully later you'll be in a job with a better pension plan. If not, eventually the auto-enrolment minimum will rise to 8% combined.

hsn

Thanks for your help James, all the best.