Ndubuisi Egwim shows how UK taxpayers can get a 50% return on pension contributions from tax relief alone, before investing a penny. A £20,000 contribution generates £10,000 back through basic-rate tax refunds and higher-rate relief via self-assessment. This tax efficiency beats even Warren Buffett's 26% long-term returns.
Automatically, she gets back all her personal allowance, £12,570. That's back. So she's no longer paying 60% on a portion of her income. That's number one. Now, when she puts in the same £15,000 into her pension, HMRC does something we call grossing up, G-R-O-S-S. So basically, they will refund her the tax that she's paid on that money because she's putting in the money from money that's already been taxed. So basically, at the end of the day, she automatically will get 25% net. That's 20% of the money. So what that means is that for the £15K she's put into her SIP, she's going to get another £3,000 on top of it. That's 20%— sorry, 25%, not £3,000 this time. Basically 25% of the £15K, and then she goes ahead to get another 25% through self-assessment. If you use an easier number Which is quick to calculate. If you use ₦20,000, rather than maxing out her ISA with ₦20,000, she puts it in her pension. Now, when that ₦20,000 hits her personal pension, remember, it's an investing account. Even before she has invested a penny, before she has taken any risk at all with investing, she's going to get back 50% on that fund, which is amazing. Warren Buffett, who is one of the guys that influenced my investing journey, he's compounded 26% for many years and he's like a legend. So if you're getting 50% back just by being That's efficient. That's not too bad.
