top up account

shanedan

Registered User
Messages
40
i currently have a compulsory pension in work which i pay 2.5% into. this year i have the option to open a top up account with my employer matching up to 3% of my contribution and for first 2 years a enhanced 2% contribution and then another year with an extra 1%.

in this current climate is it a good time to open a top up account or should i wait?

thanks
 
I presume by top up account you mean an AVC (Additional Voluntary Contribution) plan.

If your employer is willing to give you free contributions, then I would grab it with both hands. Setting aside market fluctuations, you will be up on your own tax relief and their contribution.

If you are close to retirement then ask for the AVC to be put in a Gilt fund, there is very little risk to capital invested and a better return than a cash fund. If you have 10 years plus to go to retirement then a normal default investment strategy will probably be fine.

Also remember that with an AVC, these contributions are voluntary so after your employer stops making contributions you could decide to stop making contributions also and just leave the fund until you feel you wish to continue contributing again.

If what you mention is not an AVC but going into your main pension then check if you can lower your contributions back if you wish in the future and that you are not locked into paying the higher contribution rate. This will give you more flexability should your situation change.

Overall though I'd say this offer is a godsend and never look a gift horse in the mouth.
 
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