Which is the better option?

gt568 · 27 July at 12:55PM

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?

Stubod · 27 July at 12:58PM

..both??....................................................

gt568 · 27 July at 1:03PM

Can't really afford both....?

NedS · 27 July at 1:04PM

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 · 27 July at 1:09PM

45 is a bit young to be receiving a pension ?

gt568 · 27 July at 1:13PM

Albermarle said:

45 is a bit young to be receiving a pension ?

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

gt568 · 27 July at 1:14PM

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!

Silvertabby · 27 July at 1:18PM

gt568 said:

Albermarle 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 · 27 July at 7:33PM

Silvertabby said:

gt568 said:

Albermarle 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.

retiringtoosoon · 27 July at 7:56PM

Armed forces getting triggered yo

Silvertabby · 27 July at 8:40PM

gt568 said:

Silvertabby said:

gt568 said:

Albermarle 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.

Which is the better option?

Comments

Categories