Salary Sacrifice Pension and Company Shares

josecc

I currently salary sacrifice 13% into my pension, my company pay in 8%.
I also salary sacrifice £120 to buy company shares every month which gets me one free after 10 bought.  I've done this for 1 year and need to have been buying for 5 years before I could potentially take any money out tax free.
My question is should I continue buying the company shares or would I be better off in the long run putting that money into my pension which works out at approx. another 3%.

Scottish tax payer, 46.5k salary.

Thanks 

mark55man

That sounds like quite an ungenerous scheme although I am out of touch.  Basically seems to give you 10% tax free after 5 years (plus any tax saved from your sal sac - which would say be 10% NI and 20% BR tax.  But if you sal sacced into your pension your would get that NI and BR saving anyway. If you were a HR tax payer the sal sac would be more efficient but so would the pension contribution.  Also the pension tax free ness is there immediately not contigent on you being at the same work 5 years down the line - its not clear if you just lose the 10% or would lose the sal sac benefits as well (prob just the 10% I guess)

As a scenario if you bought you company shares on the market inside your pension you would end up with 10% less. So it seems on the surface you are better off by the extra 10% shares - but are constrained by having a single investment in your company for 5 years.  I would think that 10% extra after 5 years is about 2% compound over your company share price is not really enough to tempt me given the greater risk concentration by having a larger share of your company than you would otherwise invest. 

Ultimately your position in 5 years depends on how your company fares compared to the market and 10% is not a large margin for safety.

Marcon

josecc said:

I currently salary sacrifice 13% into my pension, my company pay in 8%.
I also salary sacrifice £120 to buy company shares every month which gets me one free after 10 bought.  I've done this for 1 year and need to have been buying for 5 years before I could potentially take any money out tax free.
My question is should I continue buying the company shares or would I be better off in the long run putting that money into my pension which works out at approx. another 3%.

Scottish tax payer, 46.5k salary.

Thanks 

Nobody knows where your pension is invested and nobody knows which company you work for, or your attitude to risk, so in the absence of any helpful information sounds as if a crystal ball might be your best hope!