Pension dilemma

mobuttons17

Hi, looking for a bit of advice,
I have a Royal London pension worth 25K and I’m due to retire in three years time, with the full state pension. I have only been with my present employer for 3 years so won’t be getting much of a pension there. No other pensions as I previously cashed them all in. 

I am thinking of adding money to my Royal London pension, but wondering if it would be worth it  for such short term or better putting money into an ISA savings pot instead. 

Thanks in advance. 

QrizB

All other things being equal, for a 20% taxpayer you'll be 6.25% better off putting your investment into a pension than into an ISA.

Dazed_and_C0nfused

mobuttons17 said:

Hi, looking for a bit of advice,
I have a Royal London pension worth 25K and I’m due to retire in three years time, with the full state pension. I have only been with my present employer for 3 years so won’t be getting much of a pension there. No other pensions as I previously cashed them all in. 

I am thinking of adding money to my Royal London pension, but wondering if it would be worth it  for such short term or better putting money into an ISA savings pot instead. 

Thanks in advance. 

If you mean that's it, State Pension, RL and present employer, then yes extra pension will be better choice than an ISA.

It has a 6.25% head start due to getting tax relief on the way in and only being taxed on 75% of it on the way out   .

The above assumes basic rate payer now and when taking funds out later.

Albermarle

Alternatively ( or in addition) you could increase the monthly contributions from your salary into your workplace pension.
This would definitely be a better route if;

1) Your employer operates a salary sacrifice scheme for pension as you would get a NI savings as well ( some employers operate these schemes and some do not)

2) If your employer increases their contributions, if you increase yours. ( some do and some do not) 

As you will be aware apart from the state pension, your other pension provision is very low, so anything you can add extra can only be of benefit.

Also not sure if you are aware, but you do not have to retire just because you become eligible for the state pension.

mobuttons17

Thanks so much, I have been in touch with my present employers pension staff and they indicated for a short time of contributions it would make little impact on my final pension. I will go ahead with my Royal London option. Thanks again 

Notepad_Phil

As you say you've previously cashed in your previous pensions then you may have fallen into MPAA rules and so be restricted to how much you can add in per year across all your defined contributions pensions - see https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa for more details.

kinger101

mobuttons17 said:

Thanks so much, I have been in touch with my present employers pension staff and they indicated for a short time of contributions it would make little impact on my final pension. I will go ahead with my Royal London option. Thanks again 

Are you present employer's pension staff qualified enough and legally permitted to give you investment advice.

The answer is almost certainly no.

Albermarle

2) If your employer increases their contributions, if you increase yours. ( some do and some do not) 

You need to check this before doing anything .