LISA or pension

dd95

Been debating this for a while after reading up on things but nt sure what to do

have a spare 50-100 a month after S and S isa contrubutions

currently contribute 5% and employer 4% to my pension

do i use the 50-100 to contribute more to my work pension or do use a LISA just for diversity?

i envisage i'll turn to partner status in 10-15 years so won't have a workplace pension anymore

any advice would be great

Albermarle

If you have been reading this forum , you will know the first reaction is that you need to give more details:
Age?
Partner+ children ?
Homeowner ?
Other savings/investments ?
higher rate taxpayer ?

bowlhead99

dd95 wrote: »

i envisage i'll turn to partner status in 10-15 years so won't have a workplace pension anymore

Does 'partner status so won't have a workplace pension' mean you will hook up with someone in your personal life and expect them to go out and be the breadwinner while you just sit at home and look after the household, so you no longer have an earned income or receive workplace pension contributions because you don't have a job?

Or does 'partner status so won't have a workplace pension' mean that you are currently on a career path where you are a junior member of staff in a professional services firm but are good at it and hope to be on track to eventual partnership status, e.g. partner in a law firm or accounting firm with an equity stake rather than being simply a manager or director. In which case you may end up self-employed in that firm you own, you won't get a fixed salary or membership of a workplace pension, merely drawings of profit.

The two career paths may lead to quite different levels of income in career and retirement.

It's not clear how much you are currently putting away in savings or investments before this 'spare' 50-100 a month or what any of your goals are, or whether you would be able to use the LISA to buy a qualifying first time buyer property. But generally speaking
- if you are a high rate taxpayer pension can be quite a lot more valuable than LISA especially if you will retire early.

- if you are a basic rate taxpayer and you and your employer are only putting less than 10% into your workplace pension and you intend to stop working well before 'normal' retirement age, you are not going to have a high retirement income and should be able to efficiently extract money from your pension scheme without paying much or any tax on it, so a pension is still a fine idea unless you want to use the money in a LISA and use the bonus for getting a property.

- if you are a basic rate taxpayer now but will expect to be a higher rate taxpayer later, you probably don't need to lock into only basic rate tax relief now by making extra pension contributions at only basic rate relief, so you could use LISA or S&S ISA to invest outside a pension and maybe move it into a pension later if you qualify for higher rate tax relief and no longer need the flexibility of access to it.

There are of course more nuances to it depending on personal circumstances; we have little to go on.

Alistair31

Check out this thread

https://forums.moneysavingexpert.com/discussion/6086101/lifetime-isa

Oh, wait...

bowlhead99

Alistair31 wrote: »

Check out this thread

https://forums.moneysavingexpert.com/discussion/6086101/lifetime-isa

Oh, wait...

Oh jeez I didn't notice it was same person.

My comments above are probably duplicative of the info on plenty other threads, I'll bow out of this one!

Alistair31 wrote: »

dd95 wrote: »

seen various posts on here regarding higher rate tax payers should prioritise pension payments - why is this?

i currently pay 5% of my salary per month in my pension with employer contributing 4% - i know there is a minimum they have to contribute, but is there a maximum? should i look to increase my 5% then?

Are you a higher rate tax payer ?

EDIT:
Why another thread just four days after the last you started on the same subject ?

dd95 wrote: »

hi all

how does becoming a higher rate tax payer effect pension contributions? i read somewhere that you have to complete tax return or something to get the 40% relief?

very confused here!