One off contribution: Workplace pension or private pension

[PARunnerGirl]

Does it matter, from a tax perspective? I am assuming not because I claim the tax back in my tax return for whatever I pay into my private pension.

My basic salary is £95k and I will receive an annual bonus this month of £25k. I was going to put part of my bonus into one of my two pension pots but I’m not sure if I should put this into my workplace pension or my private pension. They perform fairly evenly and so my main concern was that I was doing the right thing regarding tax.

Makes no difference from a tax perspective which scheme you use.

Does your employer offer any match funding?

Which one has the cheapest fees?
Can your employer make it as a employer contribution rather than a bonus? Makes no difference for tax but does have an NI saving.

Hi @Sunseed! No they don’t match, they just put in a set 5% every month.

Hi @Chasingsquirrels Thanks for the NI info!

Regardless of where you put it, be mindful that you are on the edge of the income threshold where you start to lose your income tax personal allowance. Obviously we don't know all your other details but do try to crunch the numbers because you might be better off making as large a pension contribution as possible to maximise your tax efficiency. There is a sour spot where there is an effective 60% rate of tax and you might be about to land in it! Could be better for you to delay getting the benefit of some of your bonus until can access your pension than for you to hang on to some of it but pay an excessive amount of tax now.

Hi @Sunseed -thank you, this is also something I have been thinking about and need to get better educated about. I am in Scotland and I think this is probably relevant for the 100k threshold where I start to lose personal allowance. I am 40 years old so have some way to go before reaching retirement! I think last year I was advised to make a pension contribution around the time of my bonus for this reason but I need to look back and see what I actually did in the end.