{"id":159125,"date":"2025-09-25T07:56:10","date_gmt":"2025-09-25T07:56:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/159125\/"},"modified":"2025-09-25T07:56:10","modified_gmt":"2025-09-25T07:56:10","slug":"money-latest-should-you-put-money-in-savings-or-pension-it-depends-exactly-how-old-you-are-money-news","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/159125\/","title":{"rendered":"Money latest: Should you put money in savings or pension? It depends exactly how old you are | Money News"},"content":{"rendered":"

In a special edition of the savings guide, April Leeson, financial adviser at\u00a0The Private Office<\/a>,\u00a0discusses whether earners should pay into pensions or savings accounts, alongside our usual top rates tables…<\/p>\n

The balance between how much you deposit into a pension or cash savings depends heavily on what stage of life you are in, how much you can afford and what access you might need and when.\u00a0\u00a0<\/p>\n

It’s advantageous for younger people to prioritise pensions for long-term growth because compound\u00a0returns over decades mean they can afford to take more equity risk.<\/p>\n

But savings should still be maintained as an emergency fund (with a pot worth three to six months of your expenses recommended).\u00a0<\/p>\n

Cash can also be vital for expenses like\u00a0saving for a deposit on a home.\u00a0<\/p>\n

For people in middle age, balance becomes key.<\/p>\n

It’s important to keep building pensions but also to increase savings to create a buffer against risk when you begin making withdrawals.<\/p>\n

You would normally earn more as your career develops, so you should have more available to put into your pension, and\u00a0you could benefit even more from tax relief.<\/p>\n

Cash savings are essential for retirees for covering short-term living costs, enjoying their retirement years and future healthcare needs.<\/p>\n

Pensions remain important for long-term income, but withdrawals must\u00a0be managed carefully so that you don’t unwittingly pay too much tax.\u00a0<\/p>\n

For a look at the best up-to-date savings options, see below – or scroll down to find out more about the pros and cons of savings v pensions…<\/p>\n

Advantages of pensions<\/p>\n

Long-term growth: Investments within pensions can usually outperform cash savings over the long run, helping to keep pace with or to beat inflation.\u00a0<\/p>\n

Tax benefits: Pension contributions usually receive tax relief at the basic rate of income tax or your\u00a0own marginal rate, boosting the amount invested.<\/p>\n

So, for each \u00a380 invested, you’ll receive \u00a320 tax relief. If you’re a higher rate or additional rate taxpayer, you can claim back the extra from HMRC through self-assessment.\u00a0\u00a0<\/p>\n

You can save on national insurance contributions by contributing to a pension via salary sacrifice, too.\u00a0<\/p>\n

If you were to die before age 75, a pension can provide longer-term income tax benefits for your beneficiaries.<\/p>\n

Pension funds grow tax-free: All returns are free of income tax (until you withdraw), as well as capital gains tax and dividend tax.<\/p>\n

Company contributions: Your employer will pay into your pension, too.<\/p>\n

Retirement income: Pensions are designed specifically to provide an income in retirement, for you and your spouse (on death), through structured withdrawal strategies, with a quarter of the pension being entirely tax-free \u2013 as a tax-free cash lump sum \u00a0– up to a maximum of \u00a3268,275.<\/p>\n

Disadvantages of pensions<\/p>\n

Access restrictions: You usually cannot access pension funds until a set age.<\/p>\n

Market risks: Investment returns fluctuate. Timing withdrawals badly can erode value.\u00a0<\/p>\n

Complexity: Managing pension investments often requires careful planning and regular reviews, as legislation changes and allowances move around.\u00a0<\/p>\n

Advantages of savings\u00a0<\/p>\n

Liquidity: Cash savings are immediately accessible, useful for emergencies or\u00a0short-term needs.<\/p>\n

Short-term returns: Higher interest rates mean cash savings\u00a0
have become more attractive.<\/p>\n

Personal Savings Allowance:\u00a0For basic-rate taxpayers, up to \u00a31,000 of interest can be earned tax-free per year. It’s \u00a3500 for higher-rate taxpayers.<\/p>\n

Disadvantages of savings\u00a0<\/p>\n

Inflation risk: Over time, cash can lose value in real terms.<\/p>\n

Taxable interest: Interest on large savings can push earners into a higher tax\u00a0bracket without realising.<\/p>\n

Lower returns: Savings accounts do not grow wealth like\u00a0
investments or pensions do.\u00a0<\/p>\n

According to JP Morgan Asset Management, cash has been the worst-performing asset class against inflation since 1900.<\/p>\n","protected":false},"excerpt":{"rendered":"In a special edition of the savings guide, April Leeson, financial adviser at\u00a0The Private Office,\u00a0discusses whether earners should…\n","protected":false},"author":2,"featured_media":159126,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,56,54,55],"class_list":["post-159125","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-personal-finance","tag-personalfinance","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/159125","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=159125"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/159125\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/159126"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=159125"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=159125"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=159125"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}