stakeholder or money fountain

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
6 replies 1.7K views
fildok2fildok2 Forumite
6 Posts
Hi,
Newbie here! I am 53 And not much in savings.
Until recently I was prepared to follow the money fountain route- Isa,s
etc. That was until I was offered the job I am about to start.
Here is the deal. Like other companies they are offering a stakeholder
pension --but, apparently they match my contribution £ for£
Question is:--am I better to go for this rather than the money fountain idea or, dont bother with either and instead throw all my cash at paying off my £20000 mortgage? Suggestions please.

Replies

  • margaretclaremargaretclare Forumite
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    Hi

    If they're offering to match you £ for £, then go for it. Don't forget the taxman also adds 22% i.e. if you and employer combined put in £78 a month, the taxman makes this up to £100.

    You can do this in addition to the 'money fountain'.

    Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • Thanks Margaret,
    Its not a great wage in the first place so if they are offering something for nothing I might as well take it! Phil
  • dunstonhdunstonh Forumite
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    Pensions are better for retirement income than ISAs because of the tax relief. Add in free money from the employer and it gets even better.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Thanks DD,
    This is where my lack of knowledge comes in --arnt ISAs totally tax free? Phil
  • dunstonhdunstonh Forumite
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    Thanks DD,  
          This is where my lack of knowledge comes in --arnt ISAs  totally tax free?  Phil

    ISAs are free of any personal liablity to income tax or capital gains.  However, most equity funds have a 20% tax deducated from the dividend/income at source, even if inside an ISA.  They are included in the estate for IHT purposes.

    Pensions have exactly the same tax treatment inside the fund as ISAs but gain tax relief at your highest personal rate on the contributions made.  That is 22% minimum, 40% maximum.  Although with tax credits, the tax relief can work out to be a lot more indirectly.  Pension funds, before commencement, are outside of the estate for tax purposes.

    So, assuming basic rate tax, you put £100 into an ISA, it costs you £100.  You put £100 into a pension and the Govt increase it to £128.20.  
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Thanks for your responses --it makes things alot clearer now
This discussion has been closed.
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