Why Pensions are great value

Supposing you wanted to save for retirement and someone offered to increase your monthly investment by 25% each and every month what would you say?

Let's put it another way. If every time you put 100 into your pension plan I added 25 - yes every time - would you be pleased?

Well that's what you get now!

The government wants to encourage you to save for retirement so the Taxman adds on this chunk.

No other secure investment gives you this and the difference it makes over time is astounding. Look what happens after 20 years compared to an investment without tax relief.

Example 1 - no tax relief.

Investment: 100 per month    Term: 20yrs   Investment Growth: 7%pa*

Total fund after 20years = 42,733

Example 2 - with tax relief added.

Investment: 100 per month    Term: 20yrs   Investment Growth: 7%pa*

Total fund after 20years = 53,416

That's almost an extra 11,000. And this is if you are only a basic rate taxpayer. Higher rate taxpayers get 66% added on!!

 

* 6%pa after charges

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