Could you please provide with detailed information on opening a pension account? I have £300 a month to put away potentially split between 2 mechanisms
11 February 2022
Question by Harriet
I am 49. I need to open a pension. Should I do something else along side? I have £300 a month to put away potentially split between 2 mechanisms. Thank you
Answered by Christian Mather
Opening a pension is a tax efficient way to save and invest money for your future. By adding £300 a month to a pension, you will receive a relief on income tax of 20%. Therefore, you would put in £300, and the pension provider would claim the 20% income tax you have paid back from the government. This would mean a total saving of £375 a month.
You may be able to increase your contributions through your employer, this would then contribute to your workplace pension and be taken from your salary by the employer. Sometimes, employers will even match additional contributions. Before adding to a new pension always ensure you are maximising your contribution through work, additional employer contributions is like a pay rise.
A pension is where you will receive most tax relief, but you won’t be able to access this until 55. If you may need access to some of the savings, then it may be worth splitting in between a pension and an ISA. So, go with a pension if you are happy to lock your money away until that point.
I hope this helps.