Savings or Pension?

MEM62

mark13 said:

I don't think you are always better of in a pension. ISA"s are tax free.  

Then you might want to think again.  25% Uplift on the way in and all growth / compounding tax free.  OK, so your are taxed when you draw down on it but that does not outweigh the benefits.  It is just about the best vehicle for providing for your retirement.    

Altior

Not much use in having a massive pension pot if you can't pay the mortgage and other priority bills, and are under 55. For me, unless you have other significant resources to lean on in a crisis, it's best to ride both horses. Planning to rotate into pension wrapper the closer one gets to possible pension access. 

Bostonerimus1

mark13 said:

I don't think you are always better of in a pension. ISA"s are tax free.  When you withdraw money from your pension (other than the tax free lump sum) it is taxed as part of your income  As an example you could keep around £10k as an emergency fund. . The balance I would move to a stocks and  shares ISA. Any new money from earnings I would feed into the pension.  How has your pension performed over the last few years ?  Do yo know where it is invested?

It really depends on the tax you pay when working compared to when you are retired. Also you do get 25% of your pension tax free and they are not included in your estate for IHT calculations so that might be a big advantage to your beneficiaries.

The question about the performance of the investments inside a DC pension is another matter, but I believe that many people don't really understand how their pension money is invested and simply tick a box when they start and then forget about it.

MEM62

Altior said:

Not much use in having a massive pension pot if you can't pay the mortgage and other priority bills, and are under 55. 

The OP is mortgage free and has almost £100K in savings and investments.  I don't think he has any issues paying the bills.   

Money_Mad

Pension without doubt, also for long term growth putting money in to the stock market will nearly always outperform cash

TomJ

winkowinko said:

My work pension is with Nest in a retirement date fund. To be honest, I'm finding it quite difficult to find how well it has performed over the last few years. Well maybe not finding it, but probably more understanding it

Compare fund performance | Nest Pensions

The simplest display of info I can find is this

If you'd invested £1 in this fund in 2017, your pot would be worth:

After 1 year: £0.96

After 2 years: £1.12

After 3 years: £1.21

After 4 years: £1.38

Today: £1.25

Not hugely helpful, as that only counts up to 2022 if started in 2017. I only started working there in 2022, so these figures don't even show me how it's performed between 2022-2024.

There are 3 other funds, which have outperformed it substantially. So do I need to switch it?

Never dabbled with stocks and shares. Again, I wouldn't know where to start, and my lack of knowledge has meant that I've stuck with cash ISA's which are straightforward.

You can see performance on the FT's site.

https://markets.ft.com/data/funds/tearsheet/charts?s=GB00BFZNFH05:GBP is the Sharia fund; you can add the other available funds using the comparison tool, typing Nest H, Nest L and nest 2 into the search box and selecting them from the suggestions.

VNX

Altior said:

Not much use in having a massive pension pot if you can't pay the mortgage and other priority bills, and are under 55. For me, unless you have other significant resources to lean on in a crisis, it's best to ride both horses. Planning to rotate into pension wrapper the closer one gets to possible pension access. 

OP said he’s mortgage free 

Altior

MEM62 said:

Altior said:

Not much use in having a massive pension pot if you can't pay the mortgage and other priority bills, and are under 55. 

The OP is mortgage free and has almost £100K in savings and investments.  I don't think he has any issues paying the bills.   

I thought it was very obvious my point was generic, not directed at the OP. But there you go.

I was being generic, as the thread had expanded into a wider chat around the topic, as they often do.

However, the OP states they are mid 40's, and mortgage free. I work part time-ish, and earn about £24k per year. Let's say they have at least 10 years minimum to put money in a pension. They have a low income. There is no hurry at all for them to put lots of resources into a locked pension in my view, but should target rotating a lot of them into that umbrella towards when they intend to finish up paid work, and when they have access to DC pensions. 

Greb46

To be honest I have a pension which I've had for years I'm paying into it about £100 a month .All the financial advisors say you must pay into a pension (mine is a private one being self employed).The reason being is one financial advisor was a customer and I noticed all the new cars holidays etc he was regularly going on.Mainly due to the charges for having a pension which was held with a national company.The charges end up so high hence the customers good lifestyle while I'm having to graft continuously.Basically I'm paying for his lifestyle and noticed the interest rate after the charges was pathetic about 1%.
I still hold the pension though as he keeps saying I need to pay more into it not surprisingly as it will make him more money so I stopped increasing it a few years ago.Like anything does anyone working in anything really want to help someone else,no.Hence the financial advisors pushing pension schemes.
I thought look into savings myself so without any knowledge I searched on this site and a few others and found Cash ISAs where you are allowed to invest £20k a year tax free currently about 5% .Any other savings I search for the best easy access savings meaning you can withdraw the money immediately if you need it or if you don't generally a fixed savings account for a year will pay a higher interest if you don't have to withdraw it in that time .The non ISA accounts you have to pay tax on but if it's 4 or 5% it still works out a lot better than the 1% the financial advisors say you must invest in.Ive noticed my finances increase dramatically without the pension which I can't get hold of until 55 anyway and then you're still paying high tax on it.Give it a go and see what happens, controlling your own money is your choice not someone else who is planning their next holiday to the West Indies on your money!

artyboy

Greb46 said:

To be honest I have a pension which I've had for years I'm paying into it about £100 a month .All the financial advisors say you must pay into a pension (mine is a private one being self employed).The reason being is one financial advisor was a customer and I noticed all the new cars holidays etc he was regularly going on.Mainly due to the charges for having a pension which was held with a national company.The charges end up so high hence the customers good lifestyle while I'm having to graft continuously.Basically I'm paying for his lifestyle and noticed the interest rate after the charges was pathetic about 1%.
I still hold the pension though as he keeps saying I need to pay more into it not surprisingly as it will make him more money so I stopped increasing it a few years ago.Like anything does anyone working in anything really want to help someone else,no.Hence the financial advisors pushing pension schemes.
I thought look into savings myself so without any knowledge I searched on this site and a few others and found Cash ISAs where you are allowed to invest £20k a year tax free currently about 5% .Any other savings I search for the best easy access savings meaning you can withdraw the money immediately if you need it or if you don't generally a fixed savings account for a year will pay a higher interest if you don't have to withdraw it in that time .The non ISA accounts you have to pay tax on but if it's 4 or 5% it still works out a lot better than the 1% the financial advisors say you must invest in.Ive noticed my finances increase dramatically without the pension which I can't get hold of until 55 anyway and then you're still paying high tax on it.Give it a go and see what happens, controlling your own money is your choice not someone else who is planning their next holiday to the West Indies on your money!

Perhaps you are not aware but it's entirely possible, and increasingly normal, to have a pension that does not use a financial advisor, and can have very low platform fees. 

But frankly there is so much to unpick in your post, maybe you should have a look around the Pensions board before you write them off completely in favour of ISAs