Quite simply, yes! Pensions provide a simple way to maximise your savings potential. They provide you with the tools you need to save and grow an investment pot which can fund your future lifestyle.
Pensions are an efficient way to save for your future, as the government adds a tax relief boost to your contributions, and allows you to withdraw the first 25% tax-free when you decide to access your pension benefits.
If you’re a basic rate tax payer, for every £100 that you pay into a pension, the government will add £25. If you’re a higher or additional rate taxpayer then you can also claim back the additional tax relief on the band you pay through your tax return.
If you run your own limited business you can also make contributions through your business. As these contributions are treated as an allowable business expense they can help reduce your corporation tax bill. You can read more about this here.
When you decide you want to access your pension, the first 25% is tax-free. The remainder you can take in a number of different ways depending on your circumstances.
Pensions and ISAs both offer a tax efficient way to save for the future, however a pension might be better for you if:
If you’re not sure what option is best for you, then you should speak to a financial adviser who can carry out a review of your specific circumstances and suggest the best savings strategy for your goals.