Using NEST pension as an investment and to reduce tax. A better bet than an ISA?

Fontana

I have an NHS Pension of 31K per year. I also work part time and earn 30K per year from that. I have a NEST pension with my job.

If I paid an extra 10K into NEST I would get 20% added by the Government. If I then ask HMRC for tax relief up to the 40% level I would pay less tax.

If I finish work in 18 months time I want to delay taking my NEST pension until I'm in the 20% tax bracket? It seems to me that this would give a far better return than using an ISA etc. Is there any reason why I shouldn't do this? It seems too easy

I'll wait for the budget though to see if they stop 40% tax relief on contributions..

Albermarle

Pension beats ISA for most circumstances, especially if you get HRT relief on the way in and are a 20% taxpayer on the way out.
You will only get HRT relief up to a max of how much you have actually paid .
So if your income is £61K , you can only get HRT relief on £11K. As you are contributing already to a NEST pension then this will use some of that up . Even if you did not have another pension you also have to include the 20% tax relief added by the provider in the £11K .
On the other hand you will always get basic rate relief so not a major issue if the £10K is 'too much'

One point worth noting is that the NEST charging structure is unusual in that there is a high initial charge when you invest ( 1.8%?) and a low ongoing charge ( 0.3%) so not ideal if you only invest for a couple of years .

SonOf

If I paid an extra 10K into NEST I would get 20% added by the Government.
You actually get 25% added if you use that wording.    You get 20% tax relief on your contribution which equates to 25% added if look at it as an add on rather than a relief.

Nest would be an unusual choice for an individual pension.  NEST was set up to provide auto enrolment schemes for small employers as it was feared the existing pension providers would not cater for the low/no profit end of the market.     It wasn't set up to provide individual pensions (although they do that now).

Fontana

Thanks. I'll invest enough to maximise my 40% tax relief and see how it goes.