LISA or other saving option for pension age.

CC21x

Hi, 
New to the forum and joined really to better my knowledge of all things banking/saving that sort of thing.

I have a question re Lisa’s and pension saving. I do not currently have a Lisa and am aware I’m at the very top end age wise for opening one ( I’d need to do it this year or next)  I’m currently auto enrolled in the workplace pension scheme (Nest) , but other than that I have nothing else currently in place to save for retirement.  Would I be better off opening a Lisa , whether it be a cash one or S&S or opening something else/private pension to save for retirement? I’m unsure if my employer would top up contributions if I did too.  

My knowledge on this is minimal and any advice as to the best options/next steps would be much appreciated.  I should have better educated myself on these things before now but here we are and trying to get things in order! 

Thanks in advance. 

eskbanker

CY24 said:

I’m unsure if my employer would top up contributions if I did too.

Assuming you're referring to increased contributions to your workplace pension, then this is a key piece of information to ascertain before making any decision, as such employer contributions are effectively free money.

https://www.moneysavingexpert.com/savings/lifetime-isas/#pension-2 compares LISA versus pensions....

CC21x

Thanks, it would seem that the pension is firstly the best option to choose over the Lisa. Assuming my employer only matches the minimum and not any additional contributions  from myself then I’d be looking at setting up another additional pension if I can do that?  I’m assuming you can hold more than one, is that correct?  With the Lisa I was just thinking would it it best to open one anyway before I am beyond the cut off the age and no longer have the option to do so? 

masonic

CY24 said:

Thanks, it would seem that the pension is firstly the best option to choose over the Lisa. Assuming my employer only matches the minimum and not any additional contributions  from myself then I’d be looking at setting up another additional pension if I can do that?  I’m assuming you can hold more than one, is that correct?  With the Lisa I was just thinking would it it best to open one anyway before I am beyond the cut off the age and no longer have the option to do so? 

Yes, you can start your own alongside the workplace one, and this may be beneficial in terms of cost and investment choice. Though modern workplace schemes are looking much better than legacy schemes used to. BUT, contributions via salary sacrifice into the workplace scheme would give you an additional national insurance saving, so might swing it.

A LISA can be useful in providing some additional tax free drawdown capability in retirement, so as a small slice of your overall pot may still make some sense.

dunstonh

Would I be better off opening a Lisa , whether it be a cash one or S&S or opening something else/private pension to save for retirement? I’m unsure if my employer would top up contributions if I did too.  

Your employer won't pay to a LISA and is highly unlikely to want to pay to an individual pension (typically only happens with directors or senior management/key workers).

Albermarle

dunstonh said:

Would I be better off opening a Lisa , whether it be a cash one or S&S or opening something else/private pension to save for retirement? I’m unsure if my employer would top up contributions if I did too.  

Your employer won't pay to a LISA and is highly unlikely to want to pay to an individual pension (typically only happens with directors or senior management/key workers).

In their second post the OP makes it clear they are only thinking about an additional pension to the workplace one.
Assuming my employer only matches the minimum and not any additional contributions  from myself then I’d be looking at setting up another additional pension if I can do that?

OP - Your workplace pension NEST has an unusual charging structure . They charge 1.8% on the initial contribution ( normally there is no charge) but only 0.3% ongoing charge ( which is low as it includes the platform and fund charge). A low cost SIPP using a low cost multi asset fund would normally have no  initial charge and a total ongoing charge of between 0.7% and 0.4%.
As already said if your workplace contributions are taken via salary sacrifice, it could tip the balance in favour of just increasing your workplace contributions.
Whichever way you do it you need to be familiar with how any pension is invested, and whether that is suitable for you.

New to the forum and joined really to better my knowledge of all things banking/saving that sort of thing.
Welcome and I am sure you will learn a lot ! The first lesson  is to be clear on the difference between investing ( risk based products like stocks and shares) and saving ( safe interest paying accounts) 
This is the 'ISA forum' and is mainly concerned with all the rules around ISA's
It is a sub forum of the main 'Savings and Investments' forum.
Savings & investments — MoneySavingExpert Forum
There is also a specific Pensions forum
Pensions, annuities & retirement planning — MoneySavingExpert Forum
Although similar questions and answers often crop up in all three

CC21x

Hi, thank you, I feel I’m learning some already! I was unsure about where best to post in the ISA  or pension section.  I’m sure I had read somewhere on this website that even if you were unsure what or if you were going to use a Lisa for,  could be worthwhile opening it and putting something in while the opportunity was there. 

I’d definitely go down the route of contributing more via the workplace pension if it would be topped up so that’s my first option, although to be honest am doubtful on that, but I’m going to find out more.  Then it would be looking for the best place to open/start my own pension pot.  I had seen somewhere that Moneybox was worthwhile to look at for this type of thing? 

I am aware that the stocks and shares isa carries more risk than the cash isa, but if your in for the long haul could be a good option.  Certainly something for me to look at but in the meantime trying to focus on getting the pension situation in better order.   

 

Thank you for the help. 😊

Albermarle

CY24 said:

Hi, thank you, I feel I’m learning some already! I was unsure about where best to post in the ISA  or pension section.  I’m sure I had read somewhere on this website that even if you were unsure what or if you were going to use a Lisa for,  could be worthwhile opening it and putting something in while the opportunity was there. 

I’d definitely go down the route of contributing more via the workplace pension if it would be topped up so that’s my first option, although to be honest am doubtful on that, but I’m going to find out more.  Then it would be looking for the best place to open/start my own pension pot.  I had seen somewhere that Moneybox was worthwhile to look at for this type of thing? 

I am aware that the stocks and shares isa carries more risk than the cash isa, but if your in for the long haul could be a good option.  Certainly something for me to look at but in the meantime trying to focus on getting the pension situation in better order.   

 

Thank you for the help. 😊

Normally it is not an issue to increase contributions to  a workplace pension. Whether the employer will also increase theirs at the same time, is less certain of course, but that does not stop you increasing yours.

I am aware that the stocks and shares isa carries more risk than the cash isa, but if your in for the long haul could be a good option
In the long term ( 10 years or more) the S&S ISA is more likely to beat inflation than a cash ISA, so you could argue is on balance the less risky option. This assumes that the S&S ISA is not invested in something exotic/super risky, which is unlikely as normally the S&S ISA provider will not offer these types of unregulated investments.

CC21x

Hi, 
Just a question on the back of my previous ones. I’m going to open the cash Lisa just now while I can and put something in it  so that it is opened for the future should I choose to utilise  it.  The Moneybox cash Lisa offers a 4% aer variable rate, of which 0.5% is a bonus rate for one year I’m sure.  Would there be a better option to choose over this one? 

With the stocks and shares one, I believe I could open one of these in the next tax year? (if I do the cash Lisa at this time) Have seen AJ Bell is one that keeps popping up.   As mentioned I feel it’s a good idea to open whilst I can, worst case scenario being I open them with a minimum contribution which can be withdrawn down the line if it isn’t utilised. 

Any other  advice would  be appreciated. 

Thank you. 

Albermarle

CY24 said:

Hi, 
Just a question on the back of my previous ones. I’m going to open the cash Lisa just now while I can and put something in it  so that it is opened for the future should I choose to utilise  it.  The Moneybox cash Lisa offers a 4% aer variable rate, of which 0.5% is a bonus rate for one year I’m sure.  Would there be a better option to choose over this one? 

With the stocks and shares one, I believe I could open one of these in the next tax year? (if I do the cash Lisa at this time) Have seen AJ Bell is one that keeps popping up.   As mentioned I feel it’s a good idea to open whilst I can, worst case scenario being I open them with a minimum contribution which can be withdrawn down the line if it isn’t utilised. 

Any other  advice would  be appreciated. 

Thank you. 

If it for the long term/for retirement income, I would forget about the cash LISA and just open a S&S LISA from the start. There are issues transferring LISA's partly as there are so few providers.

AJ Bell are fine but they also have a low cost sister platform called DODL . 
Lifetime ISA | Dodl by AJ Bell