Which pension should I pay into?

FatDuck

I've just started a new job. I've got a new pension with 'The People's Pension'. I've got pensions from previous jobs - one with Aegon Retiready and another with Scottish Widows. I'd like to pay in an extra 10% each month, but I'm not sure which of the three to pay in to. I prefer Aegon's website due to the projection calculators, but I realize that a pretty website is not as important as maximizing my pot for retirement. What is the best way of comparing pensions - what should I find out about each? Any help much appreciated.

Houseplant26

I too would love some pensions advice! (Sorry that I can't advise OP but I will follow with interest).

dunstonh

I would say none of those based on my recent research but there isnt enough to go on.

Pension advice is a regulated activity.

jamesd

First decide which investments you want to use. Then pick the place that gets you those for least cost with the level of customer service that you want.

If your employer will do more matching of higher contributions or if salary sacrifice can be used then the work one may well be the best deal. Just because of the benefit of salary sacrifice. Otherwise you can probably beat all three.

FatDuck

jamesd - I hadn't thought of getting another pension altogether. This might be a good 4th option. (My employer will definitely not match any extra contributions.)

Is there any tax benefit if a payment comes directly from my salary into a pension rather than paid to me first?

edinburgher

FatDuck wrote: »

Is there any tax benefit if a payment comes directly from my salary into a pension rather than paid to me first?

No tax benefit, but if your employer has a salary sacrifice arrangement set up, you can avoid NI payments for any money that goes into your pension.

jamesd

There's no tax benefit but if the employer offers salary sacrifice there can be saved national Insurance instead. That's a potential saving of 12% employee NI in the basic rate pay range or 2% in the higher rate range, plus possibly some sharing of the 13.8% NI that the employer would save.

Salary sacrifice involves contractually giving up some of your salary in exchange for the employer making pension contributions of that amount or more on your behalf. It might be called a smart pension or similar. Usually there is a once a year enrollment/change period for such schemes though the law does allow the amounts to be changed whenever you like.

In general you might consider following this sort of plan:

1. Pick one ongoing pension provider you like and transfer tot his after each job.
2. Use the current job one to get maximum employer matching or salary sacrifice benefits for ongoing contributions up to whatever the employer limits on this are. Use the ongoing personal one for anything beyond this.

That way you get your choice for much of the money and end up with just one long term pension and one transient one based on where you're working at the time.