Pay extra in pension or open a LISA?

[Bumble84]

A bit of context. I am soon dropping to PT hours (young children etc) may go back up to FT in 5 years or so but equally may not depending on financial situation at that time. All DH’s and mine finances are shared in that we give ourselves £X play money every month for ourselves and everything else goes into a joint pot.

obviously I know this will affect my pension and I was looking at making AVC’s to make up the short fall. Alongside that me and DH were looking at ways to save now for children’s future and wondered about opening a LISA (this would be in my name only as he is over 40 but in the understanding we both contribute and it would be for the children) and getting the 25% government top up which I can access at 60.

Is it better financially to top up the pension by more than I would be planning to now as a savings mechanism?

Does my employer still make a contribution to my pension pot if it is overpayments, or does that vary by employer?

Is there anything else we should be looking at that might be better than the above?

Really rather depends on the detail of your employers pension?

And they aren’t “overpayments”

you select % of your contribution and your employer will adhere with their contribution policy

@Villssev I’m a bit clueless when it comes to pensions. I had a brief look on employers pension website but couldn’t find anything too obvious. I will have another look and maybe call them. I’m wondering if it’s worth speaking to an IFA about all the options.

Oh op, yes - probably best to speak to someone.

how much are you thinking a month would be realistic?

Is your husband also clueless?

I'm in a similar position, and I opted for a LISA. It's all mine at 60, and I can do what I want with it, the workplace pension is less flexible.
I'm also saving for my dc through my LISA, they'll be early to mid twenties when it matures so should be a good time to give them some money.
One of the downsides is if you ever needed to claim benefits it would be counted as savings, where a pension isn't.

LISA - say you're 35 now, you can pay in until you're 50, access it at 60.
So that's 15 yrs at max £4000 plus govmt £1000, total invested £75k.
When you're 60 and can give it to the children, how old will they be? And maybe you'll be stung for tax if you're giving it away?
There may be better ways to save for children (tho obvs the LISA is a great scheme, wish I was under 40!)

Almost certainly better to contribute to your pension, especially if employer contributes - but check your paperwork talk to them.

😳Tiny bit harsh! Just asking for other opinions. But to answer your question yes he is also clueless!

@Helpwhatwouldyoudonext I’m 38 now and children would be early twenties when the time comes so maybe house buying territory (but maybe not) good point about being stung for tax when giving away though.

But you described yourself as clueless

and you suggestion was to speak with an IFA

why not… your DH?

The 1970s called… they’d like their financial advisor back.

🙄

😂

given the op is going part time and wondering about finances… you’d kind of think you might have a chat with your DH about his thoughts before a financial advisor!

@Villssev I have spoken with DH about it as well. I’m not very articulate admittedly. I was just looking for other points of view from others who are in a similar position or maybe already been through it. I should have said that in my OP

There are certainly restrictions around giving cash and gifts each year, but with some financial advice you could get around this. If you follow the rules it's as little at £3k or £5k a month, for weddings etc.
But a £75k gift could get noticed by HMRC 😂

Check if your employer will match any AVCs you make.
Payment of your AVCs ought to come from the joint pot and not your fun money.
Do you have an easy assess emergency fund at the moment?
Do you think you have enough money for living "now" - with all the CoL increases?

Of course you should make an informed choice and do some research, the rules are complex and ultimately you will only know which one will be more beneficial in hindsight.

When will you need the money? Will you need a lump sum/regular income and over what length of time? (If you don’t need it for yourself and you are going to die before age 75, put it all in a pension).

You can gift as much as you want.

The £3k per annum relates to what doesn't get added back for IHT.

I could gift you £75k tomorrow and HMRC don't even need to know about it just now.