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Investing in Pensions
One place that is very attractive to save, if you are approaching retirement, or even retired, is in a pension scheme. The reason is the mathematics behind getting tax relief on contributions.
For �78 a standard rate payer gets a pension pot of �100. After age 50, you can cash this in, and draw 25% tax free, and use the rest for an annuity. So you get back �25, leaving �75 for the annuity. So... overall you are out of pocket �53, yet have got yourself �75 to buy an annuity.
For higher-rate payers, the maths are so strong, it is hard to see why anyone in their 50's doesn't prioritise this above ISA's etc. (They are only out of pocket �35 to get the �75 annuity pot).
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