Of course, one of the attractions for contributing into a pension is that all contributions, up to the annual limits attract tax relief, this means that basic rate tax payers pay 80% for their pension, while higher rate tax payers only pay 60%. The difference is made up in tax relief claimed back from HMRC via your tax returns
Employers that make pension contributions claim corporation tax relief on payments into Director’s or staff pension schemes.
One of the other attractions, is that of tax-free growth. Contributions into pensions are generally invested into a wide range of diversified assets which will generally grow and are aided by the fact that their growth is not subject to neither income nor capital gains tax, which means that pensions grow predominantly tax-free.
Of course, there is a great benefit of starting to build a pension fund as early as possible, but of course this is not always an option. However, the longer you leave it, the more money you will have to save to build up a similar fund to those who started earlier as pension funds benefit from the combination of tax relief and tax-free compounding growth and most of the value in a pension fund is built up from longer-term saving.
The value of investments and income from them can go down. You may not get back the original amount invested.
Past performance is not a reliable indicator of future performance.”