Work Place Pension or LISA

Ngozi

If I wanted to pay more into a pension scheme, what would be my best option?
I'm 34, not sure if my age will have any relevance.

Got the workplace pension which is 4% split, £60 each from myself and employer with AEGON. Value at start of the year was £41k, now £46k :rotfl: It fluctuates alot!!

Would I be better off putting more into the work place pension due to the tax relief or pay any extra into a LISA.

cloud_dog

Ngozi wrote: »

If I wanted to pay more into a pension scheme, what would be my best option?
I'm 34, not sure if my age will have any relevance.

Got the workplace pension which is 4% split, £60 each from myself and employer with AEGON. Value at start of the year was £41k, now £46k :rotfl: It fluctuates alot!!

Would I be better off putting more into the work place pension due to the tax relief or pay any extra into a LISA.

For a BRT payer, excluding company contributions you are usually better off putting the money in to a LISA, rather than a pension. Both receive the same amount of 'uplift'; pension by tax relief of 20% and LISA by a bonus of 25% (these equate to be the same), i.e. putting £100 in to a pension would cost you £80; putting £80 in to a LISA would give you £100.

The main advantage is because money withdrawn from a LISA is completely tax free whereas with a pension 25% is tax free but the remaining 75% is subject to taxation (if applicable).

The drawbacks with a LISA is:

1. Must open one before you reach 40 years of age
2. Cannot contribute after you reach 50 years of age
3. Cannot access the money until age 60 (you can access it earlier but there are penalties applied)