LISA v Additional pension contributions

w00519773

The LISA bonus is not a tax refund. 

Thanks.  I will rephrase my question.
I guess it is allowed to benefit from the max tax refund from the pension and the max bonus from a LISA? I am not planning to do this as I cannot afford it.

Anonymous101

w00519773 said:

The LISA bonus is not a tax refund. 

Thanks.  I will rephrase my question.
I guess it is allowed to benefit from the max tax refund from the pension and the max bonus from a LISA? I am not planning to do this as I cannot afford it.

Yes - See my point about high earners a few posts ago. Its not just especially high earners this applies to but anyone that is either maxing their pension contributions or is approaching the LTA.

MallyGirl

It is definitely worth at least opening a LISA with a pound before you are 40 as that gives you choices later. It didn't come out till after I was too old so was never an option for me

ratechaser

MallyGirl said:

It is definitely worth at least opening a LISA with a pound before you are 40 as that gives you choices later. It didn't come out till after I was too old so was never an option for me

I missed the LISA boat by a few years as well, but us oldies will have benefitted from many years of generous tax breaks on pensions which I really suspect won't last much longer. So, swings and roundabouts I guess. One day I may do the sums, but my guess is that my current pension pot probably only cost me about 20% of its current value in net pay terms (taking employer matching and investment growth into account)

w00519773

MallyGirl said:

It is definitely worth at least opening a LISA with a pound before you are 40 as that gives you choices later. It didn't come out till after I was too old so was never an option for me

If you open it before you are 40 then can you keep contributing after 40 (with the bonus applied?

kuratowski

Yes, up until your 50th birthday.

Anonymous101

MallyGirl said:

It is definitely worth at least opening a LISA with a pound before you are 40 as that gives you choices later. It didn't come out till after I was too old so was never an option for me

Yes I agree. I've got a few months of my Thirties left and although I don't think i'll need to contribute to a LISA, certainly not in the next couple of years. I'm planning on opening one shortly in order to retain the option should it become more optimal in my mid 40's. 

ratechaser

Anonymous101 said:

MallyGirl said:

It is definitely worth at least opening a LISA with a pound before you are 40 as that gives you choices later. It didn't come out till after I was too old so was never an option for me

Yes I agree. I've got a few months of my Thirties left and although I don't think i'll need to contribute to a LISA, certainly not in the next couple of years. I'm planning on opening one shortly in order to retain the option should it become more optimal in my mid 40's. 

Just make sure you pick a provider that you might reasonably want to use in the future (as opposed to just lobbing a few quid anywhere as a placeholder), given the problems others have reported on here about transferring an existing LISA once they are over 40...

That said, why wouldn't you want to take up the 25% bonus over the next 10 years - it's not THAT long until you'll be 60 and able to access it?

Anonymous101

ratechaser said:

Anonymous101 said:

MallyGirl said:

It is definitely worth at least opening a LISA with a pound before you are 40 as that gives you choices later. It didn't come out till after I was too old so was never an option for me

Yes I agree. I've got a few months of my Thirties left and although I don't think i'll need to contribute to a LISA, certainly not in the next couple of years. I'm planning on opening one shortly in order to retain the option should it become more optimal in my mid 40's. 

Just make sure you pick a provider that you might reasonably want to use in the future (as opposed to just lobbing a few quid anywhere as a placeholder), given the problems others have reported on here about transferring an existing LISA once they are over 40...

That said, why wouldn't you want to take up the 25% bonus over the next 10 years - it's not THAT long until you'll be 60 and able to access it?

I was thinking of going with HL. I don't currently have an ISA with them due to the fee's but my thinking was they are one of the bigger LISA providers so possibly less likely to be too restrictive.

The main reason I don't think I'll contribute to the LISA is I don't think its good value vs pension contributions for me at the moment. I'm currently very fortunate to be able to contribute the full allowance and gain 40% tax relief on it all, so it doesn't make sense to scale that back and invest in a LISA.
In a few years I'm planning on reducing pension contributions and prioritising my regular S&S ISA investments so that I might have the option of reducing my hours in my 50's and use the ISA to bridge the gap to the pension funds. The only scenario the LISA would make sense for me is once I have enough to bridge the gap and I'm possibly in danger of running into the pension LTA. That's not totally out of the question before I'm 50 so opening a LISA would give me that option, although I may never need it.

anxiousnow

I'm in a similar position and I do both. The salary sacrifice for the pension AVCs is certainly beneficial. What makes it worthwhile for me doing both is that  the amount of pension that you get will be reduced if you access it before your pension age. For me this is 68, for now. No doubt that will go up and up!
Having something in a LISA to access at 60 is a benefit.