Pension Vs Property ....what is best?

krish2011

[FONT=&quot]Hello Experts,[/FONT]
[FONT=&quot] Firstly Thanks a lot for looking into my query on choosing Pension or Buy to Let as a investment for better retirement savings. I am a permanent employement on a higher rate tax (40%) and 40 years old now. I own a property with a mortgage balance of 170k and live in landlord. My current mortgage interest rate is 1.24% for a fixed term of 2 years until June 2019. I don’t have single penny contributed to pension so far. My employer does not provide any contribution from their side even if I contribute pension from my side. I believe in this case I only get the tax benefit and nothing else if I do pension contribution. I am married with two kids and they are 2 years old. I planned to retire around 65 years[/FONT]

[FONT=&quot]Would you able to advice for a better retirement life whether it is good to invest in a buy to let property or contributing towards the pension fund?[/FONT]

[FONT=&quot]Many Thanks[/FONT]

dont_use_vistaprint

krish2011 wrote: »

[FONT=&quot] I believe in this case I only get the tax benefit and nothing else if I do pension contribution. I am married with two kids and they are 2 years old. I planned to retire around 65 years[/FONT]

You also get reduced NI benefit I think?
You also get the child benefit around £1,800 for 2 kids if you earn over £60K, less if you earn over £50K, if not now you likely will in the next 17 years... Plus you can access the money at 55 if you wanted.

I dont know the answer, pension growth rates may not be great but I would personally do a mix of pension and savings/investments and stay clear of BTL though.

Thrugelmir

krish2011 wrote: »

My employer does not provide any contribution from their side even if I contribute pension from my side.

Why no employer contributions?

AnotherJoe

With a pension you can get £1 into it for 60p.
With a BTL it's the other way round, earn a £1, get 60p to invest, pay tax on the rent, have the risk and hassle of tenants. Oh, and the extra SDLT tax that typically will cost you around 2 years rental profit.
Have you done the maths? From what I've seen, for a high rate taxpayer going into BTL now, you could easily be running ata loss.
Are you sure your employer won't contributeto a pension? I thought they had to ?

Paul_Herring

My employer does not provide any contribution from their side

Given that any employer with at least one employee between the ages of 22 and retirement age, earning more than £10K per year MUST provide a pension scheme, why does your employer not do so?

Do you, as an employee, fail to meet one of those critera?

krish2011

Thank you, Yes there is a NI benefit as well

krish2011

AnotherJoe wrote: »

With a pension you can get £1 into it for 60p.
With a BTL it's the other way round, earn a £1, get 60p to invest, pay tax on the rent, have the risk and hassle of tenants. Oh, and the extra SDLT tax that typically will cost you around 2 years rental profit.
Have you done the maths? From what I've seen, for a high rate taxpayer going into BTL now, you could easily be running ata loss.
Are you sure your employer won't contributeto a pension? I thought they had to ?

Thanks for the details response, Yes my employer wont pay anything even if i contribute to the pension. I still need to do my maths around. I thought to ask for general suggestion if there is a right balance level to contribute in both pension and BTL

krish2011

dont_use_vistaprint wrote: »

You also get reduced NI benefit I think?
You also get the child benefit around £1,800 for 2 kids if you earn over £60K, less if you earn over £50K, if not now you likely will in the next 17 years... Plus you can access the money at 55 if you wanted.

I dont know the answer, pension growth rates may not be great but I would personally do a mix of pension and savings/investments and stay clear of BTL though.

Many Thanks for your inputs

krish2011

Paul_Herring wrote: »

Given that any employer with at least one employee between the ages of 22 and retirement age, earning more than £10K per year MUST provide a pension scheme, why does your employer not do so?

Do you, as an employee, fail to meet one of those critera?

It is a small company and as part of the employee contract they dont provide pension contribution

Paul_Herring

It is a small company and as part of the employee contract they dont provide pension contribution

Auto-enrolment is NOT something they can avoid by sticking a clause into an employment contract. If that's what they're doing, they're breaking the law.

dunstonh

krish2011 wrote: »

It is a small company and as part of the employee contract they dont provide pension contribution

It isnt a choice. It is a legal requirement. And the employer has to do a return to the pensions regulator to confirm what they are doing.

At the moment, it sounds like they are breaking the law.