Mr Smith said: “The tax benefits are greatest for those who receive tax relief at the higher or additional rates of 40pc and 45pc. This can be hugely beneficial. Even as a basic-rate taxpayer, you are only paying 20pc income tax in retirement.”
Further to this, don’t forget that in most cases, you can take up to 25pc of your pension tax-free.
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Do the alternatives cut the mustard?
If your other investments are hit by a sudden market shock, property income can be an effective fallback, according to the experts.
Ms Haine said: “This may be the case, but ultimately ditching pension saving would be unwise. A more sensible retirement strategy would potentially include a variety of options, such as pension savings, an Isa pot and property income.”
Equally, it’s worth pointing out that for certain individuals – such as the self-employed who don’t get a workplace pension with employer contributions – one of the better alternatives, or additions, to a pension might be a Lifetime Isa.
Save into one of these vehicles, and the 25pc government bonus works like tax relief on a pension – although you can only pay in up to £4,000 a year, and the previously-mentioned withdrawal penalty can be quite restrictive.
With a Lifetime Isa the key, as with all the options which can potentially have a role to play in retirement planning, there are both pros and cons which you need to weigh up.
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So pensions still come out on top, then?
While pensions undeniably have their drawbacks as well as their benefits, in reality they are hard to beat as a retirement vehicle.
Rebecca O’Connor from Pension Bee, said: “Pensions offer a unique combination of incentives that other savings products can’t match. Namely, tax relief and employer contributions. Think of it this way: your savings are the ice cream in a cone, the tax relief is the strawberry sauce, and employer contributions, the flake on top.”
As these elements add extra cash to the money going into your pension, this makes your contribution much more valuable than it would if it went into an Isa or savings account.
Ms O’Connor added: “The reason pensions have these incentives is precisely to encourage people to save for retirement – and to increase the chance of having a decent income when you give up work.
“Pensions also arguably offer your best bet at beating long-term inflation, as the funds are designed to generate investment growth that will be, on average, higher than inflation, over the long term.”
Employees of companies that offer particularly generous schemes could be even better off, as some employers ‘double-match’ beyond the auto-enrolment minimum.
In addition, if your pension is paid via salary sacrifice, so not only do you get tax relief, you will also save on National Insurance contributions.
Ms O’Connor added: “While pensions do have some limitations, no other savings or investment product offers free money in this way. Not having one is the definition of looking a gift horse in the mouth.”