Pay rise, more into Workplace Pension or Private Pension

devends

Hi there, I'd like to put more into my pension a month and wondering what the best idea is?

I have a workplace pension that started when it became mandatory, 2012? currently I put in 5% and my place of work 3%, if I raise my amount here I think it's based on band earnings or something so basically it doesn't matter if I put more in, my place of work won't put in a higher amount.

I also have a private stakeholder pension that I've been paying into much longer.

I am now earning over 100k

Any recommendations? 

MallyGirl

is your workplace pension contribution via salary sacrifice?

devends

Yes that's correct, sorry I should have mentioned that.

Albermarle

Someone paying a lot of higher rate tax like you , should be maximising pension contributions anyway . Well above 5% .
Higher rate tax relief is very generous and you should take full advantage, before one day the benefit will probably get reduced. 

MallyGirl

As a bare minimum you should sacrifice to get yourself below £100k.
Contributions to your other pension will not be salary sacrifice so you will be losing out on the NI saving and having to claim back the higher rate tax via a tax return. Sal sac is so much easier.

Marcon

devends said:

Hi there, I'd like to put more into my pension a month and wondering what the best idea is?

I have a workplace pension that started when it became mandatory, 2012? currently I put in 5% and my place of work 3%, if I raise my amount here I think it's based on band earnings or something so basically it doesn't matter if I put more in, my place of work won't put in a higher amount.

I also have a private stakeholder pension that I've been paying into much longer.

I am now earning over 100k

Any recommendations? 

First recommendation is to find out more about your company scheme. Do you know which funds you're invested in? What the charges are? How these compare with your stakeholder, both in terms of charges and performance?

No idea how old you are of whether you have any other pensions, but a total contribution of 8% is pretty modest - and while you can still get higher rate tax relief on pension contributions, might be worth taking advantage of that until such time as the Chancellor succumbs to limiting tax relief to basic rate only. 

dunstonh

Any recommendations? 

You haven't given us any details of the workplace pension and you don't appear to know much about it either.  

Stakeholder pensions were great in 2001 but by around 2007 they were getting old and modern options coming in cheaper and better.   A good one can still be viable in the right circumstances but many are looking out of date now.

So, you are asking us to compare an option without knowing what it is against a niche option that most people here would never use.

devends

Hello, yes sorry here's some more details:

I'm 40, like to retire 55
Stakeholder Pension with Reassure - value £157,997 
L&G Global Equity 70:30 Index Fund Pension Accumulator Series 17
Total paid in £512.50 a month

Workplace Scottish Widow  -value £18,485
Scottish Widows Pension Portfolio One Pension - Fund code: CC
Total paid in £293.52 a month

Thanks

Albermarle

So about £10K pa . For 15 years = £330 K . Lets say 2% growth above inflation to be a bit pessimistic = £430 K .

You could safely generate an income from this at age 55 of approx £10 to £12 K pa . Maybe you could take a risk of it running out and bump it up to £15Kpa .
Would that be enough to live on until the state pension arrives at age 67? 

If you consider that each £100 you put in your pension only costs you £60 , due to tax relief , I think you should seriously consider upping your contributions significantly .

The annual limit is £40K , including employer contributions .

MEM62

devends said:

Hello, yes sorry here's some more details:

I'm 40, like to retire 55
Stakeholder Pension with Reassure - value £157,997 
L&G Global Equity 70:30 Index Fund Pension Accumulator Series 17
Total paid in £512.50 a month

Workplace Scottish Widow  -value £18,485
Scottish Widows Pension Portfolio One Pension - Fund code: CC
Total paid in £293.52 a month

Thanks

With an annual salary of £100K you are not paying anywhere near enough into your pension.  Based on your current contribution levels and fund size, retirement at 55 is going to feel like poverty relative to the income you are accustomed to.  Of course, we do not know what your other commitments are but you need to seriously look at increasing your contributions by some measure. 

 

devends

Hello, yes absolutely agree I'm planning on putting in more. Currently I have been saving a lot each month, some I put into pension but I have been putting most into ISA stocks and shares as I'd like to not have all my eggs in one basket, it's my understanding that if a pension company went under you're only ensured 85k which unnerves me.

My question was mainly which pension would be the best to put more into and that would give me more in the long run, I suspect workplace pension due to salary sacrifice and tax saving rather than my stakeholder pension even though that has more in it initially to count towards compound interest?