23 yo starting pension.

maxie014

Cheers for the replies we live way up north where house prices are highish but not the ludicrous high down the country.
His max contribution was 7% and the company pays 13.5%,but he can pay more himself but no more from them,he is thinking about paying 12% for now.

Alexland

To be honest I wouldn't pay more than required to get the max employer contribution for now unless it also helps get 40% tax relief or he is saving NI via salary sacrifice.

20.5% is a perfectly adequate contribution at 23.

I would suggest any other spare income should go towards the house deposit. Having a higher deposit may enable him to buy a bigger house and get the long term capital appreciation.

There is plenty of time to stuff the pension in his 30s and 40s. If he puts too much in the pension now he might end up having to throttle back later even if he can get 40% tax relief later to avoid the LTA issue.

Alex

Mutton_Geoff

http://www.telegraph.co.uk/finance/personalfinance/investing/10742396/When-saving-for-10-years-pays-more-than-saving-for-40.html

Terron

Alexland wrote: »

I would suggest any other spare income should go towards the house deposit. Having a higher deposit may enable him to buy a bigger house and get the long term capital appreciation.

Or a lower mortgage rate. Though there are parts of the North where a bigger house would likely get higher capital growth it would br unlikely be in the same league as the South used to get,

Alexland

Yup getting on the housing ladder earlier would reduce wasteful rent payments and start long term capital growth on the larger value earlier. Sounds like the OPs son has a bright future.