Pension or savings?

Corgi500

Hi,
I am employed part-time and also work on a freelance basis. My freelance work has been affected by the pandemic which has reduced my income. Thankfully, I have savings to make up the shortfall. I intend to keep on paying a reasonable chunk of money each month into my private pension as this is still quite a small pot and I only started it fairly recently. I will use some of my savings doing this until I get more freelance work. Or am I better to reduce my pension payment and keep more of my savings? I do also have a pension with my job but it's miniscule because I'm part-time and I started quite recently.  Another thing I wondered about is whether I would be better off not paying into the company pension and putting the extra money into my private pension? Any advice welcome!

AnotherJoe

Does you employer contribute to your pension (surely they do) and do they do anything more, such as match your contrinutiosn up to a particular level? Do they do salary sacrifice?

Corgi500

Thanks for the fast response. Yes, my employer does match the pension payments up to a certain amount. I'm not sure about salary sacrifice.

Corgi500

Great. No advice from anyone else? OK then.

crv1963

Corgi500 said:

Great. No advice from anyone else? OK then.

Not an advisor but I'd put in as much as needed to get the employer matching contribution- my son puts 10% of his salary into his pension to get his employer 9%. Only you know your budget, any pension pot is worth having so if you can afford to also pay into a separate one as well then it may offer flexibility in the future.

JoeCrystal

Corgi500 said:

Great. No advice from anyone else? OK then.

 Or am I better to reduce my pension payment and keep more of my savings? Another thing I wondered about is whether I would be better off not paying into the company pension and putting the extra money into my private pension? Any advice, welcome!

We do not give advice, just opinions. 
Frankly, you should not reduce your pension contributions as you are getting tax relief on it and with the company pension, you are getting employer's contribution. If you decide to reduce your company pension contribution, then you lose both employer and tax relief.

enthusiasticsaver

Reducing your pension contributions should only be done as a last resort.  You benefit from the tax relief and the employer contribution up to a certain point. Company pension first for the employer contribution.  

OldBeanz

Among other things we do not know how old you are. There would be different thoughts if you were 20 than if you were 55.

83705628

Corgi500 said:

Hi,
I am employed part-time and also work on a freelance basis. My freelance work has been affected by the pandemic which has reduced my income. Thankfully, I have savings to make up the shortfall. I intend to keep on paying a reasonable chunk of money each month into my private pension as this is still quite a small pot and I only started it fairly recently. I will use some of my savings doing this until I get more freelance work. Or am I better to reduce my pension payment and keep more of my savings? I do also have a pension with my job but it's miniscule because I'm part-time and I started quite recently.  Another thing I wondered about is whether I would be better off not paying into the company pension and putting the extra money into my private pension? Any advice welcome!

Tough one.
I would prioritise things in this order:
1. Your current cashflow situation has to come first.
2. If you have a pension with an employer then absolutely max that out because they match your contributions (upto a certain amount, if you don't just either ask or check your contact or pension statement or something) and you get your tax back on it so it's like 2-2.5x your money guaranteed. Opting out of this is an absolute last resort.
3. With your sipp, you only get your tax back on it so if you're a basic rate taxpayer it's 25% ontop of what you put in. Maybe hold off adding more to the SIPP until your financial situation is more stable again. If you think you might need to use up savings in the near future you really shouldn't be putting that into a SIPP.

atush

Corgi500 said:

Thanks for the fast response. Yes, my employer does match the pension payments up to a certain amount. I'm not sure about salary sacrifice.

This answers one of your Q's ie should you stop paying into your employers pension and just pay into your personal pension. Which is a NO as you would lose the free money your employer pays in.