Which is the better option?

gt568

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

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

gt568

Can't really afford both....?

NedS

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

45 is a bit young to be receiving a pension ?

gt568

Albermarle said:

45 is a bit young to be receiving a pension ?

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

gt568

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

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

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

Armed forces getting triggered yo 

Silvertabby

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.