Im sure this question has been asked many times

heres my situation

im 30 yr, single, no kids, no debt apart from a mortgage, but more importantly no pension at all

I am looking to put away £300/month into long-term savings or a pension

whats the best thing to do?

I have a cash ISA which isnt really used much, so for the time being im putting it into there. Ive been looking at savings accounts offering 5% interest, but I appreciate its not that straight forward with pensions?

Is their a league table of which pensions offer the best value?

many thanks

The main advantage about putting money into a pension is that you get tax relief on contributions (with an ISA, it's only the interest/gain that doesn't get taxed). The main disadvantage is that you can't usually touch the money until you are at least 50 or 55. In my view, you should spread your savings between the different options.

There are league tables for performance and you can compare charges but it's for you to decide what makes one particular scheme better value than another. A good place to start your research is this web site. It has links to all the other sites that you may want to look at.

www.thepensionservice.gov.uk

I've just had an IFA round giving me advice on Pensions. He recommends I go with Legal & General because it has low costs and been in Money Management 5 star awards for years. Is this good advice?

also, what are the advantages / disadvantages of a personal pension against a SIPP, I realise you need to be switched on with a SIPP because your doing it yourself, and therefore its more risky, but generally, does 1 have more expensive costs? and what are the dfferences in tax relief / benefits

many thanks

I would ignore the 5 star stuff. I've googled "Money Management" and not found anything obviously related (like a magazine).

Whether you choose the investments yourself or let someone else do it, it doesn't necessarily affect the risk. For example, if you've decided that you want your pension invested in a range of footse companies, you could either choose an investment trust that does this and put it in a SIPP or you could choose a managed pension fund that does this. The main difference is that the latter may simply invest in the investment trust that you chose which could mean that you get the same risk but you are charged, say, 1% per year for investing in the pension fund and then the pension fund (in effect you) gets charged another 1% per year for investing in the investment trust.

Whatever you go for, you should be able to easily find out how much the charges are (perhaps just over 1% per year for a managed pension, just under 1% for a SIPP). You should also be able to easily find performance history. If you can't find either of these figures easily, you should simply look elsewhere. It's important though not just to look at the best performing fund (as that is likely to be the most risky) or the cheapest (my view is that it's worth paying a fraction of a percent extra each year just to be dealing with an organisation that you know and trust). Some companies have lower annual charges but higher dealing charges.

All pension funds that you are likely to be thinking about paying into have similar tax benefits. The contributions are tax exempt so, if you pay 22% income tax through a PAYE scheme, you can give the fund a cheque for £780 and they will get another £220 from the inland revenue and invest £1000 less their charges on your behalf.

Hello - tax benefits are all very well at point of contribution... At start of current recession, I was "sold" idea to cash in my paid up pensions, take out a competitive annuity with associated monthly income. Low and behold, I pay the going tax rate of approx 22% on this income - so where are the real tax benefits? Basically, pension income is taxed, particularly, at the time / age when you least need to be taxed. I am a lay man and probably not switched on enough to do the comparisons. I rarely see any comments about the down sides of this tax pay out. I guess events are all down to one's choice, but every thing seems to be so confusing and complicated for us lay people. It seems it is all about third parties scheming to take tax / commission, etc. Layman looses out. Any view points or advice?

Pension income (including the state pension) is taxed in the same way as any income (divdends, interest receivable etc). The tax benefits for pensions is that you don't pay tax on what you put in (which was very worthwhile if you were a higher rate tax payer as you would get tax relief at 40% and then only pay 22%, unless you'd put alot of money away, when you draw the money out).

As in employment you will get a certain sum tax free (which may partly depend on your age) before the tax rate is applied and you need to check that this is happening otherwise you may well be paying too much tax.

I am also in a similar position to the OP. I am 34 married with 1 child and have yet to arrange a pension.

From my understanding then, the decision is whether I want to Pay Tax when I draw the money out [ie. a pension], or pay Tax when paying money in [ie. an Isa/ or other Savings].

If I had a private pension, say stakeholders with a high street bank, would they also take payment net of tax and put the difference in?

Thanks

There is nothing wrong with having both ISAs and a pension plan. Both have limits and advantages. When you are over 65, you wont pay tax on at least the first £10k of income (£9490 this year) wherever it comes from so if you are getting a good income now but expect to be on a low income after you retire, a pension plan will look attractive.