Martin Lewis warns workers over mistake which will 'give up' their pay rise
The BBC Sounds podcast host returned to ITV this week, where he delivered a pensions special from 8pm on Tuesday night (January 28).
Martin Lewis has warned pension savers over a mistake which is effectively "sacrificing" a pay rise. The BBC Sounds podcast host returned to ITV this week, where he delivered a pensions special from 8pm on Tuesday night (January 28).
Martin said: “The most important thing to remember is the money you put into your pension is from pre-tax salary. So this is the superpower. You get tax relief. So as a basic 20% rate taxpayer, you’re putting £100 in, but of course when you get it in your pay packet 20% is being taken off.
“So to put £100 in only costs you £80. So you’re getting £100 investment for the cost of £80.” Martin continued: “So for a basic rate taxpayer that means you, if you’re putting in £80, you’re getting £160, double the money going into your investment, double your money from what’s coming out your pay packet.
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“If you’re a higher rate taxpayer, £60 becomes £160, if you’re a top rate taxpayer - and some people might say it’s unjust they’re the ones that get the biggest but anyway - £55 is nearly being trebled to £160 going into your investments.
“That is just completely unbeatable. So in a way if you were not to do it, you’re giving up a pay rise.” The 52-year-old Money Saving Expert founder wrote on Instagram: "Pensions have two Superpowers that mean you get far more invested than it costs you.
"This is my quick video explainer, yet it’s just a titbit, watch my full Martin Lewis Money Show Pension special on ITVX." In reply, a saver said: "If only the NHS would let us put more in to our pension. The contributions keep going down and we can not put more in."
They asked: "Why is this? I've had no answers."
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