Is it better to put £50 a month away in my Nest pension or save it in an account that can’t be touched till I am 66?

Is it better to put £50 a month away in my Nest pension or save it in an account that can’t be touched till I am 66?

Hi. It's hard to answer this without more specifics or straying into offering personalised advice, which we can't do. But if I take your questions as - should you save into the pension you have set up for you, or just into a general account which is locked away so you can't access it and spend it? - then the thing to really consider is the tax relief you get on a pension.

Most people who are working will get a government top-up on savings into a pension. Basically, if you're saving money you have earned (and paid tax on) into a pension, the government gives you a pat on the head and effectively pays the tax back into the pension. To encourage you to save. This is then locked away until retirement age, whereas many alternate savings accounts can be accessed as and when you want. So I think the main question is whether you can afford to lock your £50 a month away until retirement age. If you can, then the tax relief from the government will make this the most powerful way of saving for most people.

Basic rate taxpayers in England would get an additional £20 for every £80 saved into a pension - added automatically by your provider. So if you're working, you should see the £50 contribution into your Nest pension magically increase when you pay this in. This makes pensions a pretty compelling option, but of course, bear in mind the lack of flexiblity and the fact they are locked away. Hope this helps!

Holly