Martin Lewis gives gold pension warning as he says let’s be really plain’pla | Personal Finance | Finance
Martin Lewis has given advice over what people should do with their investment after being asked if it was better to plough money into gold rather than a company pension scheme. A caller to his BBC Podcast said they were wondering if they should invest in gold as the price is soaring.
Just today, Gold prices shot higher with demand for the precious metal, often seen as a safer investment, once again lifted by uncertainty about the impact of world events on oil supplies and the wider financial markets after the US-Venezuela invasion.
The price of an ounce of gold jumped about 2% to reach around 4,435 US dollars (£3,300) on Monday morning. In a call to Mr Lewis’ podcast. The person said: “My boss today said it might be better to buy gold coins rather than invest in the company pension scheme – what do you think?”
Martin was very concerned at the suggestion and said: “Well I think first of all your boss is really naughty. So, let’s remember, assuming the company pension scheme is a classic auto-enrolment pension scheme, you are legally entitled to as an employee, which means if you contribute, then your employer has to contribute as well.
“The minimum contribution is if you put in 5 per cent of your earnings, your employer has to put 3 per cent on top, and that is virtually unbeatable. Now, an employer should absolutely not, by law, be discouraging you from putting money in the company pension scheme.
“I don’t know if it’s a big company or a small company. If it’s a small company and the person owned the company, for them to be saying something like that to you is absolutely outrageous because it smacks to me like they are trying to basically save themselves a cost.”
The money saving guru explained that a company pension scheme brings a great deal of benefit – as the employer will contribute too – meaning that if it’s turned down then the worker is actually missing out, effectively, on pay. He said: “Let’s be really plain about this, if you put money in your company pension scheme, yes while I accept you lose disposable income because you’re getting less in your pay packet because you’re contributing, in total terms you’re getting bigger remuneration so not using the auto-enrollment scheme is effectively you foregoing extra pay. If your boss is encouraging you to forgo extra pay that doesn’t seem right to me.e just feels naughty to me.”
“Now if we move off that that bit, and I always say as a standard thing to do most people should be maxing out the money they put in their company pension scheme to make sure their employer is giving them the highest matched contributions they should get because both you’re getting the tax relief from investing in the pension, but you’re also getting the extra employer’s contribution.”
Gold it tempting many people as it often rises in troubled times as a ‘safe’ investment. Speaking after the rise following the US kidnapping of Venezuelan president Nicolás Maduro Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Gold climbed over two per cent to breach $4,420 an ounce, as traders seek shelter from geopolitical tremors sparked by Washington’s dramatic move in Venezuela.
“The metal’s rally builds on last year’s stellar run, with its attractions as a so-called safe haven colliding with uncertainty over US rate signals ahead of Friday’s payrolls. For now, gold is wearing the crown as the market’s preferred insurance policy against both political risk and policy surprises.”
Mr Lewis gave his verdict on gold: “As for investing in gold, look I can’t talk about individual investments. Gold is seen as a relatively safe asset. It’s an interesting one as if you buy a specific type of UK bullion they any gains you make on it has a capital gains tax exemption so it can be quite useful/.
“But you know, frankly depending on which company pension scheme you’ve got you wouldn’t get that capital gains tax investment. If you want to invest in gold you could invest in a gold exchange traded fund – a fund that basically buys gold and moves along with the gold price for you and you could be doing that not just with your own money but with the money your employer is putting in too.
“So I can’t give you the specifics of whether gold is good or bad, that’s a regulated area. I’m not a regulated investment advisor. The truth is no-one knows what’s going to happen to gold over the next few years. It may well be a good investment but I would always think in encouraging you not to put money in your company pension scheme just feels naughty to me.”
To listen to the podcast click here.
