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You're better off paying into a pension unless you have unusual circumstances. You're contributing post-tax income to the LISA whereas a pension is pre-tax. The 25% bonus is less than what you've paid in tax
(You are taxed on withdrawal from the pension though, LISA can be accessed before 60, etc.)
frankenbike-
yeah, read the MSE link, not right for me, interesting product though, never came across
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On the one hand yes. On the other you don’t know what the tax rules will be in the future when you withdraw from your pension.
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Reminds me I should see about contributing more to my pension. We have two options
You sacrifice some of your salary to your pension. This figure is deducted from your gross salary, so you do not pay tax and ni on the amount you have sacrificed. The total deducted is then paid into your pension scheme along with 50% of the Employer’s NI savings that we as company save by you sacrificing some of your salary. For instance, if you chose to sacrifice £100 per month the total amount paid into your pension scheme per month is £106.90. (£100.00 x 13.8% / 2 = £106.90).
You choose to pay into your pension from your net pay. This is taken after you have paid tax and ni. The total deducted is then paid into your pension scheme but is then topped up by HMRC by 20%. For instance, if your salary is £1,200 per month and you choose to pay an employee pension of 2% per month then £24 – 20% is paid into your pension scheme but is then topped up by 20% by HMRC. (£24 + 20% = £28.80)
I've no idea which one. Let's say I don't need the extra cash I'd be dumping in the pension, which of these would you choose and why? Normally I'd take the one the offered the lower tax amount but now I've no idea.
amey
Howard
hippy
ah .. rules me out unless I withdraw etc, is it essentially a 25% guaranteed interest, tax free, capped £4k? Seems great if so!