Pension vs LISA

Tonski

I am debating between paying more money into my pension and opening a LISA for retirement planning and was after some advice. I understand that long term, for the vast majority of people it's going to work out a lot better paying into a pension rather than a LISA due to the tax relief and getting free money from your employer. My question is, once you've matched the maximum employer contribution, is it better to put any additional money into a LISA and get the 25% bonus, or is it still better to pay the additional money into the pension? For example, my company match your contribution up to 10%. Above this level, where i'm not going to get any free money from my employer, should I save say £300 a month into a LISA or pay this extra into my pension? I don't have any LISA's at the minute and I'm 38 so coming towards the end of when I could potentially use one. My current salary is just in the higher tax band but as my pension is a salary sacrifice scheme, I only pay 20%. If my tax goes up to the 40% rate, I guess the pension option will become more appealing over a LISA but at the minute which is best?

Albermarle

If you scroll down to the later parts of this article, you will a pros and cons table for pension vs LISA.

Lifetime ISA (LISA): how they work & best buys - Money Saving Expert

WillPS

I think you'd still be better making higher contributions from your salary, unless you earn less than £12,570 (in which case the LISA would be better as you'd be earning a 20% bonus despite the fact no income tax was due on the money at the point of earning).

Do take note of the pros and cons mentioned above.

jimjames

Normally you also save NI even in 20% taxpayer if you salary sacrifice so that gives boost to pension vs LISA