Is it sensible to put 10k in my pension

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I have a 10k bond maturing next week and am debating putting it into my pension pot.

Is that a sensible thing to do?

For background I'm 48, earn 22k, have 50k currently in my personal pension pot and about 15k in my work place one. Ive maxed out this year's ISA allowance.

I think others will have more meaningful advice but just wanted to say, emergency fund savings. Have you considered that? Do you have 3/6 months cover of expenses saved. If not I’d save. If you do, then pension seems sensible..?

I agree with PP - because once it's in your pension pot you can't access it. However, adding to your pension is really sensible provided you are sure you won't need that money.

Yes sorry should have added that, I do have access to emergency cash should I need it and this money has been locked away for a while so I'm not reliant on it

Are you likely to max out your ISA allowance next year? If not, just holding on to it until 6th April might be worth considering for the extra flexibility it gives you.

In a SIPP that 10k becomes £12500. When you retire you can take 25% of that (plus any growth) tax free, so if you don’t need that flexibility then it’s worth it. However there are limits on how much you can pay in and get tax relief on (can’t be more than you earn) so check this first.

It depends on your tax band and the tax band you are likely to fall into when withdrawing the pension.

For instance, assuming:
You're a basic rate tax payer,
Your other pensions will use up your personal tax allowance,
You leave the £10K pension invested until age 60 at an average of 5% growth rate pa.

In this case you would be better off by £1,120 overall by utilising the pension as opposed to putting it in an ISA in April.

Is that amount worth the trade off for the loss of flexibility of an ISA?

It is rarely a bad idea, but you need to consider your short term and long term goals, plus have sufficient pension annual allowance available.

As you have an emergency fund, have maxed ISA, then pension would be a sensible next step. It locks it away which is a concern, but has the benefit of tax relief on the way in and tax-free cash on the way out, which currently means it is a 6.25% gain plus the growth over the decades.

I would in your shoes given you have already maxed out your ISA and have emergency fund, put it in pension for the tax benefits.

I think you should seek proper pension advice from a qualified pensions adviser.

For 10k? It’s unlikely to be cost effective at that level.

Open a SIPP if you really won’t need access til 57 or whatever pension age is by the time you look to retire - I moved a few smaller pensions into one of the summer that were pretty much dormant and on top of the 25% uplift (will be more once I self assess as higher rate tax payer) it has grown 15%

Thanks everyone! Really appreciate the suggestions and considerations 😊

If you are comfortable with locking that money away for at least 10 years, then putting it into your pension (assuming your pension is suitably invested to your risk profile) makes financial sense.

If you wanted to have flexibility to access sooner then a S&S ISA would give you that.

You don't to go 100% either way though, you could put 50% into your pension and the other half towards next years ISA allowance if you are unsure.

Your pension pot is pretty small, so yes, I would be adding to it. Plenty of time for that money to grow still.

I would put it into an isa for a year first see what happens if you don’t need it. Great if you do you do just move it across.

@CoastalCalmcould you let me know which SIPP? I’m so confused but need to do similar

Yes very sensible. I have a SIPP with interactive investor and very happy with the service and returns so far. as others had said, you get govt bonus on the way in and ii have free regular investing, good range of funds and the app / customer service is really good. I can always speak to someone if I need to which is brilliant.

Got a year of no account fees to begin with which really helped build the pot and then returns start kicking in which is so encouraging. I didn’t start saving properly until 40 (self employed, time out for kids blah blah the usual story) so felt a bit like playing catch up initially but honestly, start putting in any extra today and you won’t regret it. I have SIPP and ISA on the same platform so easy to keep track.

Have a look at Money to the Masses for providers, they have good articles and comparison tables as fees really eat into returns. i tried fidelity too but hate the app. HL have increased fees. Do not use expensive providers like st James place! But equally I didn’t want a super budget option like free trade. Personal circs are important to consider.

Have a look at Rebel Finance School. I'm going for one with Vanguard.

Here’s a link for year of no fees on interactive investor if anyone wants to try them but do check they fulfill your criteria first. Covers SIPP, ISA and trading account (I don’t use the latter!). Might cover JISA too but I’m not sure.

www.ii.co.uk/recommend-ii?ii_referrer=1bjnmq202d7w4-9z8ox5m4um1h

I have a SIPP with Fidelity. I have invested in various funds plus some gold and my average yearly growth is 14%.