24 Year old needing sound advice!

El_Torro

Can you or someone explain the tax benefits of putting money in a pension, and why it’s attractive for someone of my age to be piling money into it opposed to easily accessible ISAs and savings accounts. Apologies for my ignorance if that comes across as stupid.

The benefit of paying into a pension is that you get the income tax back. So either 20% or 40% (in England), depending on how much you earn. When you take the money out of your pension you pay tax at your marginal rate, which for many pensioners will be 20%. Bear in mind as well that when you access your pension you can take 25% tax free. So even for a 20% tax payer the benefit is 6.5%.

Bear in mind that the big downside of a pension is that you need to be a certain age when you access your pension. Currently it is 55, though for a 24 year old by the time you retire it will probably be 58, or higher. 

Essentially for a 40% tax payer paying into your pension to get you to the 20% tax bracket is a good thing. If you're currently a 20% tax payer anyway then the decision becomes more difficult. 

Especially if you're currently saving up for something big (like a house purchase) then an ISA or LISA could be a lot more beneficial than investing in a pension. It depends a lot on your circumstances really.

Based on the limited information you have given in this thread I would say that you should contribute enough in your pension to get the maximum contribution from your employer. Anything above that should go in an ISA or LISA, unless there is a good reason to pay more into a pension.