Sharesave or pension

CamperMan_3

Hi,

I have the option to join my company Sharesave scheme. My only thought is should I put the money into my pension instead.
I'm 54, so retirement is getting a little bit closer. I already max out my work contributions (5%) which are matched by the company and I pay some extra AVCs. I was thinking about putting £350/month into the Sharesave scheme for 5 years. I do have some rainy day savings. Many of my older pension pots from other jobs are not that big due to lower salaries, this is the first time I've had some available money.
Any thoughts most appreciated.

Ozzig

Probably down to how confident you are the share price will rise over those 5 years.

I have 5 small 5-year share saves on the go with work, all £50 so it balances out the ups and downs.

On one it made 4 times the amount saved, on another, I'm looking at getting my money back and the rest are all somewhere in between. (Based on today's share price)

Notepad_Phil

Putting money into a sharesave scheme at the expense of increasing pension contributions could make sense if you've got some plan on what to do with the shares when they mature in 5 years time. But personally I'd want to be extremely sure that my company was going to still be in very good health in 5 years time before doing so. Maybe put a bit of money into both.

If you do decide to take part in the sharesave scheme then don't be like many of my work colleagues from years past who simply continued to keep the company shares when the scheme matured - they built up large sums of cash in those shares which were heavily hit when the company ran into problems and some were even more unfortunate when they were also made redundant.

Brie

Notepad_Phil said:

Putting money into a sharesave scheme at the expense of increasing pension contributions could make sense if you've got some plan on what to do with the shares when they mature in 5 years time. But personally I'd want to be extremely sure that my company was going to still be in very good health in 5 years time before doing so. Maybe put a bit of money into both.

If you do decide to take part in the sharesave scheme then don't be like many of my work colleagues from years past who simply continued to keep the company shares when the scheme matured - they built up large sums of cash in those shares which were heavily hit when the company ran into problems and some were even more unfortunate when they were also made redundant.

Not quite sure what is meant by the bold bit as being made redundant actually worked in our favour at my previous employer.  it meant that I (& many colleagues) didn't need to wait the 5 years to get the option price.  Yes we also did have 5 years worth of savings but there was no loss.

what I like mostly about the sharesave schemes is I knew I could lose money (except to inflation of course) as all the money was refundable.  And there's the possibility of making money if the share prices are in your favour.  I have continued to hold my shares as I'm not desperate for the money at this point and just have to make sure monitor the share price to ensure I cash out at an appropriate time.  it's definitely part of my retirement plan.   

housebuyer143

I joined my work sharesave 3 years ago when interest rates were basically 0% so I either got no money on my savings or I put it in the scheme and maybe made something. Seemed like a no brainer especially as the shares were at record low prices due to covid, making money seemed almost a certainty. 

Fast forward 3 years and I am on track to double my money so in my case I am going to take home about £15k profit which is amazing.

I haven't however joined in any other year and won't again as it really all comes down to the price you buy it at. Look at your company and see the max the shares have been and the lowest and I would probably only do it if you are buying really low and there is a good chance of a good rise in the next 5 years. 

TheBanker

I've joined the Sharesave scheme every year for the last 15 years. There's only once that I've taken the cash rather than exercising my option to buy shares. I normally sell the shares straight away as I don't want to have my investments concentrated in my employer's shares. 

Back in the day, I'm pretty sure they used to pay a nominal interest rate on the savings. I wonder if that might come back given the way rates are rising?

CamperMan_3

Thanks everyone. 

I do have an existing share save that matures later this year and has done quite well. There’s another one coming available and I’m just trying to work out if at this point it’s better to put the monthly amount into my pension rather than take out another one given my age and the fact that I do pay higher rate tax

techno12

I'd joined our Sharesave scheme when the company I work for was taken over. Seemed a no brainer with the bonus shares etc, despite the 5 year tie in.

In turn, that company was taken over by a huge Chinese conglomerate, so the shares no longer exist, and thus we all exited early, tax free. 

Doubled my money I think after 2 years, all told, so definitely worthwhile. Some of the old timers who had been there 10yrs+ will have made loads...

Notepad_Phil

Brie said:

Notepad_Phil said:

Putting money into a sharesave scheme at the expense of increasing pension contributions could make sense if you've got some plan on what to do with the shares when they mature in 5 years time. But personally I'd want to be extremely sure that my company was going to still be in very good health in 5 years time before doing so. Maybe put a bit of money into both.

If you do decide to take part in the sharesave scheme then don't be like many of my work colleagues from years past who simply continued to keep the company shares when the scheme matured - they built up large sums of cash in those shares which were heavily hit when the company ran into problems and some were even more unfortunate when they were also made redundant.

Not quite sure what is meant by the bold bit as being made redundant actually worked in our favour at my previous employer.  it meant that I (& many colleagues) didn't need to wait the 5 years to get the option price.  Yes we also did have 5 years worth of savings but there was no loss.

Great if the only shares you have are in the current scheme, but possibly not so great if you've kept the shares from multiple maturing previous schemes and now you've not only lost your job but also potentially a large sum of money if you need to sell down those other shares to get cash now that you're unemployed - share prices do not always recover and employment is not always easy to find. The OP is also 54, so being made redundant is possibly not something that they would count as a favourable thing, unless they are very lucky and redundancy comes at the right time for them.

what I like mostly about the sharesave schemes is I knew I could lose money (except to inflation of course) as all the money was refundable.  And there's the possibility of making money if the share prices are in your favour.  I have continued to hold my shares as I'm not desperate for the money at this point and just have to make sure monitor the share price to ensure I cash out at an appropriate time.  it's definitely part of my retirement plan.   

I really do hope that continuing to hold the matured shares works out well for you, but it's not something I'd want to do unless the company shares were a small percentage of my total assets as I know from personal experience that keeping too a large percentage in shares in the same company that employs you is not a one way bet to financial success. I've known people to lose substantial sums due to unemployment and share price slumps meaning postponed retirement plans.

See above in bold.

CamperMan_3

Thanks for all your responses. Any thoughts on pension versus sharesave given my age and paying higher rate tax?

retiringtoosoon

When I was in a sharesave scheme with Homeserve they deducted contributions from gross salary and hence salary sacrifice which was nice: is that standard with all such arrangements?

ofc now just waiting for the Brookfield reorganisation 😂