Pay into my pension or cash ISA?

waterman10

I've had a workplace pension for just under a year. I contribute 7% of my monthly pay, which is the most that my employer will match. But I can contribute more if i want to. I was looking at it today and it says that it has gone up by over 9% since I started it.

I've also got a cash ISA that's earning 4.52%.

I would normally just save money in my cash ISA but I'm wondering if I should increase my contribution to the pension. I know the performance will fluctuate and I won't always get 9% but i'm thinking it might be the smarter move. I have plenty money readily accessible in my cash ISA incase of any emergencies and don't really need any more readily accessible money. I know I wouldn't be able to withdraw money from my pension until I'm 55 at the earliest which is about a decade away and I'm ok with that - as i say I have enough money in my cash ISA for any unforeseen events.

I'm just wondering what people think and what they would do? thanks

GrumpyDil

Not really enough information but if you are a higher rate taxpayer then even on the basic info I would be looking at pension contributions if only for the benefit of the tax relief.

waterman10

I earn below the £12,570 threshold and therefore pay no income tax.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82020252#Comment_82020252

You still get tax relief on your pension contributions. The max you can pay in, including tax relief is your gross salary ( assuming your salary is above £3600 ?)

You will not be able to access your pension until 57 ( it is 55 now but is increasing in 2028)

There are two separate factors to adding to a pension;

1. You get free money from your employer and you get tax relief on your contributions.
2. The pension is normally invested in the financial markets, so will go up and down , but long term it should grow more than the interest you get on cash savings. ( the key phrase if - long term, so >10 years)