pension query: tax efficient pension contributions

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teresa 1076

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I have been advised to increase my pension from 5% to 15% of my salary as it is tax efficient - is the money I put into my pension secure/guaranteed on retiring or is this money at risk of value of shares on retiring?
Thanks in advance
 
Who advised you ? A pensions salesman who is going to get commission on your increased contribution by any chance ?

It is generally taken as a bad thing to invest money simply to save tax.

The good news is that you are asking the right questions - the reality is that your money could be invested in a range of products some of which may be suitable for your profile, some less suitable.

z
 
Sorry Zag but thats a load of rubbish to say that its a bad idea to invest just to save on tax, please tell me another investment that will deliver 20% or 42% return (depending on your tax band)??????

Teresa it is always a good idea to increase your pension and to plan adequatley for your retirement, Zag did have a good point in that you should be careful about who is giving you the advice and always secure the best deal that you can for yourself.

I assume you are below 29 if 15% is the max you can pay, as you are only 29 you can afford to go into high risk funds as you have a minimum of 30 years to ride the ups and downs of the equity markets. A secure fund is no use to you as over a long period inflation will erode any of the small return you would make on a secure fund

If you need to know any more let me know
 
Teresa it is always a good idea to increase your pension
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So if you have credit card debts costing you 18% pa interest & car loans costing you 9% pa interest, would you still recommend putting money into your pension before clearing your debts? To say any form of investment is 'always' a good idea is crazy.

Expert - If you have any vested interest or you operate as a professional in this market, please declare your interest.
 
Thanks for the advice - Am I correct in understanding the money I put in is only secure if I take out a 'secured fund'. Investment details are as follows:
Secured, Consensus, Active - can anyone explain the difference.
Hard to get information from my company on this, therefore putting the question out to you.
Thanks
 
Teresa

Secured Managed fund should mean that there is a low/no risk with this fund.

Consenus Managed fund means that the fund manager is not attempting to beat the stock market returns, but the aim to to provide a return mirroring the stock market generally. There is an element of risk with this fund.

Actively Managed fund means that the fund manager attempts to beat the general return of the stock market, generally an actively managed fund would be invested primarily in equities, there is a risk element with this fund also.
 
Hi Teresa - Don't get hung up on short-term fluctuations in share prices (and correspondingly your pension fund) unless you are quite close to retirement age. In the long term, history shows us that a stock market investment will beat all other investments.

If you limit yourself to 'secure' funds only, you will be missing out on the possible gains available in the market. It is all about risk/reward ratio - low risk=low reward.
 
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