can i cancel my pension?

The big stories that won't go away in this weekend's press are how we are going to be surprised that 18% stock market growth in 2005 may still result in lower pension estimates on our annual future estimates

How does that work then???

Actually this makes no difference at all.It's a common misconception that there's additional growth on the tax relief, but there isn't.

I don't understand that. Please could you explain.
Surely if you invest £100 then you would get more growth than you would if you invested £78 (assuming same charges and rate of growth).
The % is the same, but the actual amount you get is higher.
E.g. at 5% on £100, you'd get £5 on £78 you'd get £3.90, so you're £1.10 better off, aren't you??

The equivalent ISA investment to a pension would be a Stocks and Shares ISA, max 7k a year.

My arguments remain the same.
1) Some people are already using this.
2) For some people it's not enough.
(I accept it's probably fine for the average £24K earner).

The main thing I wanted to remind Moneysavers about was that once the money is put into a pension, you can't get it out.

I agree, but I think they should also bear in mind all the other points, so I'm glad this discussion has taken place.

whoever is the chancellor can decide if they want to change that figure

In BOTH cases, the government can change the rules.
Both pensions AND ISAs are subject to whatever the tax regime is at the time.
The government did a few years ago take billions from pensions by removing tax relief on dividends.

Thanks for the info.
I feel really dumb because I have a BSC in maths (don't tell anyone :-)
It certainly is counter-intuitive.

Actually this makes no difference at all.It's a common misconception that there's additional growth on the tax relief, but there isn't.

Just had another thought and whilst I think this works mathematically I'm not sure it works in practice.

What we are saying is that if you money in a pension, get tax relief and get compound growth then it is the same as putting it in an ISA ,getting compound growth and then getting tax relief (by putting the whole lot in a pension).

I don't think the last bit will work becuase tax relief is just that, it's relief on tax THAT YOU HAVE PAID. As a general rule you can't get back more relief than tax you've paid.
So let's say in 30 years time you have £300K in your ISA and you want to get £84K in tax relief then you won't be able to because you haven't paid £84K tax in that tax year (unless you are extremely rich in which case you aren't a basic rate tax payer anyway).

If I'm wrong then please let me know, but I'm pretty sure this is how tax relief works. It's is "relief" i.e.you have to have paid it first. It's not a free unlimited bonus.

So whilst I agree with the maths, I don't think our current tax laws allow it.

That is the issue with putting it off. You will have to remember to review it a number of tax years before you finish work to ensure that if pension is the way to go, you have sufficient allowances to cover the contribution.

There are some risks as well. If you are unable to work due to sickness/accident or whatever, you no longer have an earned income to contribute against.

Death benefits will be lower on an ISA as well. Although you dont plan to die, 1 in 5 will not make retirement.

I'm not sure how many people retire when they plan to.
If you are unlucky enough to be made redundant at 55 or above then it's very difficult to get anyone to employ you.

Indeed so, and this is when you could unexpectedly need money - which you may not be able to get if you've put all your savings in a pension.Particularly in a company pension, where you'll pay a big penalty to retire early.

Definitely sensible to spread your money around.

[And you still don't get any compound growth on the tax relief!]