switching from savings account to pension

M

mausy

Guest
Hi,

I have been investing in a pension for the last 3 years. I also have a high interest savings account.

I got a phone call from my bank (one that is on a knife edge of being nationalised) today trying to convince me to close the savings account and redirect those savings to my pension account.

The funny thing is that after listening to various commentators on the radio on numerous financial advice slots and hearing Eddie Hobbs recommend that people stop investing in pensions, I was considering (not decided yet!) stopping my pension.

So I am a little confused to say the least. I am deeply suspicious recently with regard to any bank at the moment. And although I would love to think that the representative from the unnamed bank was looking out for my best interests, is there a possibility there is some other motivation for them getting me to put more money into my pension???

Very grateful for any advice..

Regards,

Mausy
 
If the pension provider is the same as, or linked to, the bank, I would be suspisious that they were just after the commission or charges on the pension. It may be a good idea to look into a low-cost PRSA to pay your savings into, rather than going with what your bank suggests.

If you wait a few weeks, hyou can avoid this year's new pension levy, but still (depending on the tax rate you pay) get higher rate tax relief on your contribution.

That said, once the money is in a pension, your access to it is restricted, while in your savings account, you can get your hands on the cash a lot more easily.
 
Hi McGaggs,

Thanks for the reply. Yeah, the pension is a PRSA with the same bank alright. I think I will probably go with continuing to pay into the savings account instead. Having easy access to the money in the short term is a decider for me also.

Thanks for the advice/info!
 
If your bank made an unsolicited phone call to you to advise you to transfer your savings into a pension without at least doing a review of your financial circumstances, I suspect that you'd have grounds for complaint to the Financial Regulator. (If that's the case, I'd also suspect that the motivation is that the bank's "financial advisor" gets paid commission for selling pension plans but gets little or nothing for your savings account.)

Savings and pension plans are two utterly different animals. Both should form part of your financial plan. First, you should have a financial plan, encompassing your short-term, medium-term and long-terms needs, goals and aspirations. Then and only then should you start thinking about how much money to allocate to savings and how much to pensions. Once you've got past that, shop around (including seeking advice here on Askaboutmoney) for the best pension plan for your requirements. Your bank is a tied agent of a pension company and can only sell you the pension products of one company. This one company might or might not have a product that suits your needs.
 
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