Wanting to start a firm in 5-10 years so wondering whether to opt-in to the U.K. Pension Scheme / Defined Contributions or to put that money in an ISA?
Just secured a job offer and weighing pros and cons of opting-in to the UK Retirement Savings plan if I want to start my own firm in 5-10 years. Is that money not worth more to me in my pocket/ISA now rather than saving it for when I retire, at which point in time, the retirement money will be relatively minuscule? However, as the employer tops up 5% if you put in 15%, it is kind of like ‘free money’ from them. What do other people in the same boat do?
Hi Intern in RE - Other, just trying to help:
More suggestions...
Hope that helps.
Same conundrum here. Bump
Any time your employer offers you a pension contribution, that's basically free money that they're putting on the table that you should absolutely take. Also pay into your pension, that's money you're investing pre-tax so its massively beneficial.
Agree - but at the same time, saving cash to buy your first flat/house can be a good thing and then agree max out your pension.
You really shouldn't be putting off saving for your pension. Yes its tempting to have money now but you have to think long term.
The same can be said of real estate right? The sooner the buy the sooner you have equity exposure and the more you can save in your pension (agree at the max levels - but if you are in IB you should be able to buy after 3 years in IB with your bonuses) and with your bonuses thereafter you should be able to max out your pension and catch up quite quickly.
And note that you also have taxes on your pension at exit if it exceeds a certain amount (I think 1m on top of normal taxes - I think 25%) so all in your money above that GBP1m is not really THAT tax efficient...
You're making bold assumptions about future bonuses there. Before its in your bank account, your bonus is zero.
Yes I have spoken to people who are well-versed with the Pension Scheme and they have said that you will be taxed massively / have to pay a huge fee if you take your pension money out early. Personally, I will probably opt-out, as although you are getting free money, by the time we are able to use it - the time value of money factor will mean it won't be worth as much, and I would rather have that money invested in avenues that can give me a higher rate of return. What are people's thoughts on rates of return of the pension scheme?
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