Back in full-time work, where should I prioritise my money?

[FinallyBackToWork]

I have just turned 51. Been stuck in very part-time work for the last decade due to caring responsibilities, the double whammy of elderly parents and young kids. I have kept up workplace pension contributions (tiny amount of course) and my NI throughout, have checked that I'm on track for state pension if it still exists in 20 years' time.

Now at last I'm able to return to a full-time job, just accepted the offer today , will be around £35K.

I'm thinking of three places to put my newfound earnings - workplace pension, ISA, Premium Bonds. Should I prioritise overpaying into my pension? Or stick to standard contributions and put spare money into an ISA and/or Premium Bonds?

Any thoughts/advice please 🙏🏻 as I just can't get my head around it.

Is your workplace pension scheme good? How much will your employer contribute? Personally I'd be maxing that out completely if it's a decently run, large employer

Congratulations on your new job !

Are you debt free with a decent emergency fund? If not, I’d do that first.

Max out workplace pension but do check for fees and for actual returns of what your money is being invested in. Max out ISA (current £20kpa). If anything left over consider a SIPP and GIA.

Thank you thank you!!

Workplace pension is pretty good I think (large employer). Standard contribution is I pay 6.1%, they pay in 14.5%. I haven't yet checked how much extra I can overpay, waiting for paperwork from my employer.

No debts apart from mortgage which we're aiming to pay off in around 5 years.

I don't have much in the way of personal savings at the moment. A couple of thousand in an instant-access savings account, a couple of thousand in PBs.

So that was one of my considerations, if I put all my spare money into my pension, I wouldn't be building up accessible savings. I guess the answer is I have to find a balance 😬but I feel so indecisive! I'm very grateful of course that it's a good problem to have...

Is it a defined benefit pension scheme (NHS, Covil Service, Local Govt) or defined contribution (your figures seem to suggest the latter? This will make a difference as to how you use your extra money.

@FinallyBackToWork I would prioritise building an emergency fund 3-6 months expenditure. I would then look at S & S ISA in a tracker fund and pension. You could always split between the two.

Overall it's a hybrid scheme @Florencesndzebedee but I think because my salary is below the threshold, it will all be DB. I'm not completely sure though, I found the website a little confusing.

I wouldn’t be putting anymore money into Premium Bonds. They give such a low return when you don’t have many and are only worth doing if you have a five figure sum as a holding. Instead I would increase your savings in the instant savings account to build up your emergency fund (don’t bother with accounts paying less than 3.5% interest) alongside paying into a SIPP and an ISA.

Check out th ukpersonalfinance Reddit and follow the flowchart. Pension generally a good idea but check the default fund isn’t a donkey if it’s not defined benefit.

Also most defined benefit pensions also have an additional voluntary contribution arm which you can use to build up a tax efficient defined contribution pot.

I am 64 and retired, with 2 small pensions, state pension still another 3 years away. I wish looking back I had put more money in pension, I could easily have done so. I’ve put my savings in ISA’s, savings bonds which do give me interest to live on, I also have premium bonds, where we do ok, thanks to a £5,000 win this year.

Congratulations on your new job. I would focus on savings and pensions rather than premium bonds . Martin Lewis has a good explanation on his website as to why they aren’t the most efficient way to save. Pensions are a great idea, but not if you might need to get at your money earlier

Thank you all for the input! So I’ll forget premium bonds for now! Looks like the consensus between everyone is to build up minimum 3-6 months salary in instant access or ISA, then pile AVCs into my pension. This sounds like a good plan to me and feels very achievable.

Load as much as you can into a pension
You will not get an immediate 2%% increase from tax relief on any other investment
Pension
Pension
PENSION

I'd skip the premium bonds and go for half into pension, half into an emergency fund split between ISA and high-interest savings account. Basic rate taxpayers can earn up to £1000 per year savings interest without paying tax anyway. Moneysavingexpert website has the latest and best rates for all these products.
Once you've got a solid emergency fund you can start looking into, say, S&S ISA.

You need to get a full understanding of pension and how it fits with your longer term plans. When can you start drawdown for example, fees, risk rating of your portfolio…all very boring and adulty but it’s really important to get on top of it.

This ties all of OPs money up until respective drawdown age…what if they want to retire early…need a fund to bridge the gap between dates.

At your age and if it's a defined contribution scheme then currently any contributions would be tax free if salary sacrifice, or if paid from taxed income would get a tax rebate (so only costing you NI contributions).

You are close to the age when you could take out a lump sum of 25% of a DC pension (again currently tax free).

So a very tax efficient way of mid-term saving, but has risk of the government messing with things. The new inclusion of NI on pension contributions is due in 2029 so might be worth putting in as much as you can now (if you don't need it before retirement).

Outside of pension then an ISA makes sense again because interest is tax free. Cash or S&S (r a mixture) depending on your risk appetite.