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Which is the better option?

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gt568
gt568 Posts: 2,535 Forumite
Part of the Furniture 1,000 Posts Name Dropper
So as things stand I am currently 45.....
Would like to stop work 60ish...
I recieve a pension of 10k, which in 10 years will jump to about 15k....
Currently earning 48k on top of that....
I started paying into the new company pension pot this year, I contribute 6%, the company 8% thru a Smart scheme.....

My question is would I be better off putting AVCs into the pension, or I have an option of buying shares monthly which I can sell tax free if I keep them for 5 years....

I can't work out what is the better option really, any advice?
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Comments

  • Stubod
    Stubod Posts: 2,567 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    ..both??....................................................
    .."It's everybody's fault but mine...."
  • gt568
    gt568 Posts: 2,535 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Can't really afford both....?
    {Signature removed by Forum Team}
  • NedS
    NedS Posts: 4,484 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    gt568 said:
    So as things stand I am currently 45.....
    Would like to stop work 60ish...
    I recieve a pension of 10k, which in 10 years will jump to about 15k....
    Currently earning 48k on top of that....
    I started paying into the new company pension pot this year, I contribute 6%, the company 8% thru a Smart scheme.....

    My question is would I be better off putting AVCs into the pension, or I have an option of buying shares monthly which I can sell tax free if I keep them for 5 years....

    I can't work out what is the better option really, any advice?

    Does the share purchase scheme offer any other benefits or incentives besides being tax free if kept for 5 years? Often the employer will match your purchase so it's buy one, get one free, giving you an immediate 50% gain, plus all tax free. If so, these are pretty much a no brainer unless you think the company is going down the pan and the shares are likely to halve in value in 5 years.

    If there are no further incentives, then it's a closer call. The shares are tax free whereas pension contributions are effectively tax deferred (no tax now, and 25% tax free on withdrawal but the other 75% will be taxed), but the pension is likely a well diversified investment (e.g, index tracker, etc) whereas company shares give you massive concentration risk in one company. You know your company - you decide which is likely to give you a better return on investment.

    Or you can hedge your bets, and do both?


  • Albermarle
    Albermarle Posts: 27,739 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    45 is a bit young to be receiving a pension ?
  • gt568
    gt568 Posts: 2,535 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    45 is a bit young to be receiving a pension ?

    Not really, earned it thanks.  All part of my T&Cs.
    {Signature removed by Forum Team}
  • gt568
    gt568 Posts: 2,535 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    NedS said:
    gt568 said:
    So as things stand I am currently 45.....
    Would like to stop work 60ish...
    I recieve a pension of 10k, which in 10 years will jump to about 15k....
    Currently earning 48k on top of that....
    I started paying into the new company pension pot this year, I contribute 6%, the company 8% thru a Smart scheme.....

    My question is would I be better off putting AVCs into the pension, or I have an option of buying shares monthly which I can sell tax free if I keep them for 5 years....

    I can't work out what is the better option really, any advice?

    Does the share purchase scheme offer any other benefits or incentives besides being tax free if kept for 5 years? Often the employer will match your purchase so it's buy one, get one free, giving you an immediate 50% gain, plus all tax free. If so, these are pretty much a no brainer unless you think the company is going down the pan and the shares are likely to halve in value in 5 years.

    If there are no further incentives, then it's a closer call. The shares are tax free whereas pension contributions are effectively tax deferred (no tax now, and 25% tax free on withdrawal but the other 75% will be taxed), but the pension is likely a well diversified investment (e.g, index tracker, etc) whereas company shares give you massive concentration risk in one company. You know your company - you decide which is likely to give you a better return on investment.

    Or you can hedge your bets, and do both?



    I don't think they do offer a buy one, get one etc, but I'll need to check.....

    Business is certainly good, but who knows what the future holds I guess.

    It's a tough call!
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  • Silvertabby
    Silvertabby Posts: 10,099 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    edited 27 July 2023 at 1:20PM
    gt568 said:
    45 is a bit young to be receiving a pension ?

    Not really, earned it thanks.  All part of my T&Cs.

    Armed Forces pension, payable on completion of 22 years plus?  It's what we signed up for.  I was once told that I was 'very lucky' to have such a pension, and I replied that yes, I WAS very lucky - lucky to have completed my 22 years with my life, limbs and mind intact.  Unlike so many others. 
  • gt568
    gt568 Posts: 2,535 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    gt568 said:
    45 is a bit young to be receiving a pension ?

    Not really, earned it thanks.  All part of my T&Cs.

    Armed Forces pension, payable on completion of 22 years plus?  It's what we signed up for.  I was once told that I was 'very lucky' to have such a pension, and I replied that yes, I WAS very lucky - lucky to have completed my 22 years with my life, limbs and mind intact.  Unlike so many others. 

    29 years in the bank.....cher-ching.
    {Signature removed by Forum Team}
  • Armed forces getting triggered yo 
  • Silvertabby
    Silvertabby Posts: 10,099 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    edited 27 July 2023 at 8:42PM
    gt568 said:
    gt568 said:
    45 is a bit young to be receiving a pension ?

    Not really, earned it thanks.  All part of my T&Cs.

    Armed Forces pension, payable on completion of 22 years plus?  It's what we signed up for.  I was once told that I was 'very lucky' to have such a pension, and I replied that yes, I WAS very lucky - lucky to have completed my 22 years with my life, limbs and mind intact.  Unlike so many others. 

    29 years in the bank.....cher-ching.
    Even better when there's two of you!  22 years (Sgt) for me, 29 years (Flt Sgt) for Mr S.
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