What should I do with my savings?

[Sweetchocolatecandy]

I currently have 10k in a cash ISA which is doing nothing at the moment (think interest rate is 0.01% or something pitiful like that), so should I move my savings to a S&S ISA or my workplace pension? My first thought was a S&S ISA as any gains I would make are tax free whereas if I pay into my pension the money has technically already been taxed and will be taxed again when I eventually withdraw it in years to come. However my pension is really poor as it’s the ‘people’s pension’ with a 5% contribution from me and a 3% from my employer so I’m slightly worried about the future. What would you do in my position? I’m happy to put the money away long term.

You should take into account how old you are, how much you already have in your pension and whether you have other emergency savings/ how much money you have left at the end of the month - all of which might affect your decision. You might want to do a mix of savings, S&S and pensions.
If you contribute to a pension, the tax will cancel out as government will top it up, i.e. if you contribute £80, they will top up to £100 therefore you’ll have a bigger sum to grow in your pot.
Money in a pension is locked until you retire, you might find it easier to increase your salary contributions %, so you only commit a smaller amount monthly, and still have your savings in case of an emergency.
Money in a S&S will remain accessible but but be aware the investments may go down as well as up, hence the need for an emergency fund.

What is the money for... if it is an emergency fund then your need it accessible and it will lose money due to inflation.

If it is for long term investing then pension usually wins mathematically over S&S ISA, due to tax relief on the way in. However it is not as accessible, so S&S ISA is useful if you intend to retire early.

Thank you for your responses. I’m 35 and although I’m not too bothered about the money being accessible any time soon, I would like to retire early (in my 50’s if possible) so I do have retirement in mind when I think of how I want the money to be used.

Well you can only access SIPPs at 57 and your pension I think it’s 60? (Look at your terms). With a SS ISA you could save in that and use the savings to retire earlier until you reach pension age and then rely on your pension

whereas if I pay into my pension the money has technically already been taxed and will be taxed again when I eventually withdraw it in years to come. However my pension is really poor as it’s the ‘people’s pension’ with a 5% contribution from me and a 3% from my employer so I’m slightly worried about the future.

if you are earning hypothetically £2000 a month, put £500 from your salary for 24 months into your pension and that way it will not be taxed going into your pension - then take £400 from your savings to live on if you need to

also, id look at putting £5k into premium bonds, whilst your waiting to use for income

When people talk about your ‘retirement income’ they don’t just mean a pension. They mean all your investments and you need to know that any pension contributitions can’t be accessed before a certain age - so if you need the money later you won’t be able to get it. In your shoes I would be trying to mop up all stocks and shares ISA allowances first. Then is there’s money spare I’d consider topping up pensions.

Put it in a stocks and shares ISA for a far better return. Obviously you will be subject market fluctuations but over the last century the average annual return is 10%.
I have had a 700% return over 20years

Given your age have you looked at a lifetime isa, for under 40's. I put 4K in a year and it's topped up to 5k.

If you don't already have emergency savings, I'd put it in premium bonds as they're easily accessible. That's where I keep my emergency fund.

In your shoes I'd put most if not all the money in a stocks and shares ISA. I view my S&S ISA as the fund to help me bridge the gap between early retirement and drawing on my pension (well, I'm 34 and only have £5k in it so far and add £100 monthly but I can dream....)

With regards to your pension, I'd up your contributions if you can bear to. I increased mine from 5% to 10% a couple of years ago and in reality haven't noticed the difference too much month to month in my pay packet but obviously it's building up in the background. If you can't right now I'd see if you can if you get a pay rise in future, divert the extra into pension or other savings to avoid lifestyle creep and keep building the savings pots.

My emergency fund has also been moved to premium bonds. Even if its just whilst you decide what to do.