Pension or self investment

[Knowledgeable]

Just wondering what is the best approach to save? I don’t have much pension so have started contributing more in the last few years. It saves taxes and my job top up, up to 9%. So I thought this is the best approach.

However I was discussing with younger colleagues and they said they prefer to do the investments themselves. Not have the money tied up.

What do people think?

the devil is in the detail op
so many factors to consider
age? how much already in pot? expectations for retirement? home owner? dependents?

and that’s just a few

A more than one string to your bow is the best to spread risk but as the poster above says more information is needed. Plus if you have access to money as much as it can be spent in an emergency which seems good would it ever get replaced.

It absolutely makes sense to contribute to work schemes to avail of any free matching %.

Beyond that there are quite a few things to consider, as the poster above has mentioned but I would also add you need to look at what the fees are on your work scheme and most importantly what fund you are invested in.

Many work schemes but you in a default fund with very conservative risk parameters. The upside to this is that your money is very safe but the downside is that you will have a lower rate of return.

Staying within your work scheme but changing the fund you invest into any be a good halfway option.

If your young colleagues are throwing away 9% from employers they're foolish, even apart from the tax benefits.

If money is truly for a pension then how can it not be 'tied up'?

Thank you. That’s what I thought

I am 50 and only 100k in pot

Basically it’s the investment and the amount of that investment that makes the money not the wrapper that investment is in. e.g. a pension is a wrapper, so is an ISA.

Your colleagues mention not having money tied up, so they are realistically investing in an ISA with no tax relief or employer contribution. Big mistake.

You mention a “pot” with a value so you are talking about a DC pension.

Let’s take a DC pension, it might be invested in FundXYZ. You could also buy FundXYZ in an ISA. So if your employer gives you free money into your pension on top of the tax-relief that then it makes far more sense to buy it in your pension. i.e. £100 from you plus £100 from your employer plus £50 tax relief that grows by 100% in the next 15 years would give you £500 ending value.

If however, you think the options for investing in your company pension are all pretty rubbish options then putting £100 into an ISA with no employer contribution or tax relief buying FundABC or CompanyX shares instead, would need the investment to grow by 500% to match that £500 ending value.

It could well be that your younger colleagues want access to the money in case of emergencies (and that points ot them being financially illiterate - they should have an emergency cash savings buffer for this in case of loss of job - and so should you). The price they are paying for this is massive.

Your younger colleagues should be investing in the company pension and because they are young should be investing in the highest risk category fund(s), or even better 100% in the stock market as a low cost index tracker if that is an option in the company pension.