Savers are almost three times more likely to put extra cash into a bank or building society account than into a pension, research finds.
Almost two-thirds (65 per cent) of those with a savings account would put spare cash into their savings in the next 12 months, compared with a fifth (22 per cent) who would put additional money into their pension, according to a survey by Standard Life.
Men are more likely to opt to boost their pension (26 per cent) compared with women (17 per cent).
Almost two-thirds of those with a savings account would put spare cash into their savings compared with a fifth who would put additional money into their pension
While saving rates appear more attractive as they rise to the highest rates in years, contributing extra cash to a pension has the added benefit of tax relief.
This is between 20 per cent and 45 per cent, depending on your earning bracket, and is a significant boost to your contribution.
For example, for a basic-rate taxpayer to make a £100 contribution, a personal contribution of £80 is required with £20 from tax relief.
This is like getting an immediate 25 per cent return on your initial contribution from the Government.
Pension savers need to lock up their cash until they are 55 (or 57 from 2028) in return for the benefit, however.
Helen Morrissey, Hargreaves Lansdown’s head of retirement analysis, says: ‘Interest rates may be the highest we’ve seen in years but inflation remains high at 6.8 per cent and over time this will eat into the purchasing power of your cash savings, so it’s important you also look at pensions once you have a buffer in place.’
