Do you put in a lump sum of savings into your pension pot

stuffy123

Hi  
I've got a work pension scheme and was wondering would it be best to put my savings into my work pension pot or keep it in my cash ISA

Marcon

What's your main objective?

DRS1

Haven't you got something taxable you could contribute instead?  Salary perhaps?

If you think your ISA shouldn't be in cash you can always open an S&S ISA and transfer the cash into that (making sure it is a transfer and not a withdrawal followed by a new contribution).

Linton

Pensions are for the long term - when you retire and beyond,  Cash savings are better for the short term and easy access but can be expected to provide lower returns.  What is the money for and when will you want to access it?

Emmia

This depends on your balance of accessible savings. Do you have enough outside your pension to cover your expenses for 3,6 or 9 months as an emergency buffer?

If you don't I'd work on that over tying up money in your pension 

stuffy123

Marcon said:

What's your main objective?

We Plan to retire in 5 years time aged 60 . So was thinking if we put some of our savings into our pension we might get better returns than a cash ISA. Also the rates for saving rates may drop now the BOE have dropped the rate to 4%

Albermarle

stuffy123 said:

Marcon said:

What's your main objective?

We Plan to retire in 5 years time aged 60 . So was thinking if we put some of our savings into our pension we might get better returns than a cash ISA. Also the rates for saving rates may drop now the BOE have dropped the rate to 4%

Normally the money in a pension is invested in the financial markets, so can go up and down. However in the long term the trend is nearly always up, but it is never guaranteed.
Cash savings returns are not high but they are guaranteed.
The good thing about pension contributions is that you get tax relief, so you get a kind of head start.

jimjames

stuffy123 said:

Marcon said:

What's your main objective?

We Plan to retire in 5 years time aged 60 . So was thinking if we put some of our savings into our pension we might get better returns than a cash ISA. Also the rates for saving rates may drop now the BOE have dropped the rate to 4%

You also have the option of a S&S ISA which can invest in the same things as pension. Still means you have the tax free wrapper but no tax relief. Can be useful to have that tax free money alongside the pension once you retire.

ali_bear

stuffy123 said:

Marcon said:

What's your main objective?

We Plan to retire in 5 years time aged 60 . So was thinking if we put some of our savings into our pension we might get better returns than a cash ISA. Also the rates for saving rates may drop now the BOE have dropped the rate to 4%

Personally I never bothered with cash ISAs, the interest rate offered was always paltry and they never made sense despite the tax freeness. 

What you are looking at is making better use of those cash ISA savings in the run up (or down!) to retirement. Two choices really, either transfer into a S&S ISA where the money can be better invested for growth, at least to keep pace with inflation, hopefully better. Or, use the money to supplement your take-home employment income while you make much bigger pension contributions, potentially up to the maximum allowed under the current rules. 

If you're paying any income tax at the 40% rate you should definitely do some of the latter, to take you down to the 20% band at the least. 

DRS1

stuffy123 said:

Marcon said:

What's your main objective?

We Plan to retire in 5 years time aged 60 . So was thinking if we put some of our savings into our pension we might get better returns than a cash ISA. Also the rates for saving rates may drop now the BOE have dropped the rate to 4%

What will you do when you retire?

I think those that know would say a 5 year horizon is short for investments.  Too short perhaps?

But if you are going to drawdown over a 30 year period then investments would be more suitable.

Even so you will want to keep some assets in cash for the early years of retirement and to act as a buffer against what is politely called market volatility.  Maybe even 5 years worth of spending?  I know people may say less time (3 months worth even) but how long will markets take to recover?  6 months?  a year? a decade?