Small pension contrib a waste?

B

Bren

Guest
Am not currently working but have maintained a E100 monthly contribution to my private pension. My husband has a good monthly pension contrib. I'm just wondering if its worth my while at all paying this amount in each month or would I be better off putting the E100 a month into our mortgage? Thanks.
 
A lot depends on your circumstances. With a PRSA, you can "store up" tax relief and use it if/when you return to taxable employment. Other forms of pension don't allow this.

If you're not going to get the benefit of tax relief on your contribution, I'd suggest that you may be better off directing the contribution elsewhere. At retirement the proceeds of your pension fund (after withdrawing your tax-free lump sum) will be taxable. So there's little point in saving money without tax relief, when the proceeds may be taxed.

If your pension is likely to be so small that it will be below the tax threshold, there may be some point in continuing.

Worth a closer look.

Liam D Ferguson
[broken link removed]
 
> If you're not going to get the benefit of tax relief on your contribution, I'd suggest that you may be better off directing the contribution elsewhere.

If you are not already maximising contributions to your SSIA(s?) then it might be worth doing so. You can always consider using the maturing SSIA to fund or top-up your pension savings when the time comes...
 
Pension

Thanks, don't have pension but do have mortgage, would I be better off putting it into that? Was only paying into pension for 2 years so not much in it but might pay into it again in future if/when I return to work.
 
Pension

No easy answer to that. A lot depends on your overall financial circumstances, plans, other investments/debts etc. In general it makes sense to clear or reduce high cost debts and also to get lower cost debts such as a mortgage down to a "manageable" level before getting serious about saving, including long term saving such as a pension (the exception being an SSIA which generally should be maximised if at all possible). See the AAM Guide to Savings & Investments for more on this and related trade-offs:

www.askaboutmoney.com/guide/index.htm

On the other hand the sooner you start taking steps to plan for your required pension savings targets the better. If your mortgage is large and/or takes a significant portion of your monthly net income to service then it may make sense to reduce that first. If in doubt please consult with an independent professional intermediary (e.g. an authorised advisor or a good RIAPI/multi-agency intermediary but NOT a tied agent) who will be better placed to more comprehensively assess your overall circumstances and needs and recommend suitable strategies and products. If possible agree the work to be done an a fixed fee up front.
 
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