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    • JustAnotherSaver
    • By JustAnotherSaver 16th Mar 17, 9:51 PM
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    JustAnotherSaver
    Is there a good reason to not use a S&S ISA for retirement?
    • #1
    • 16th Mar 17, 9:51 PM
    Is there a good reason to not use a S&S ISA for retirement? 16th Mar 17 at 9:51 PM
    I was just browsing online & saw this video of Martin Lewis talking about the L-ISA http://www.bbc.co.uk/news/uk-39259316 (from about 2:00 onwards).

    He says he has concerns about most people using the L-ISA for retirement. Surely the S&S L-ISA is just like my regular S&S ISA except the L-ISA has an extra 25% thrown in from the government? So better than what i currently have, right?

    Now if i understand it right then he's saying since there'll only ever be yourself putting money into your ISA whereas in a workplace pension you're also getting money from your employer, even if they only ever pay in the minimum then the pension is better.


    So let's say you pay in to your 'retirement plan' 20% of your wages. For examples sake, that could be 12% into your workplace pension and 8% into your S&S ISA.


    Is he therefore saying & would it not be better to just lump the whole 20% into a workplace pension?



    For myself i know ISAs can be accessed early (ok the L-ISA can't without penalties) but i wouldn't be accessing a retirement plan until i retire so having the option isn't important to me.


    However one thing that does bother me is that my dad paid in to his pension all his life. Even paid in extra constantly. He had 3 bad years (poor health) of retirement before he died & due to the age gap between him & my mother she gets a reduced pension on what she would've gotten had the age gap been less.


    I'm just trying to weigh up whether it's worth running a S&S ISA / S&S L-ISA alongside a workplace pension & since i usually miss the point i figured i'd ask this Q here

Page 1
    • dunstonh
    • By dunstonh 16th Mar 17, 10:15 PM
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    dunstonh
    • #2
    • 16th Mar 17, 10:15 PM
    • #2
    • 16th Mar 17, 10:15 PM
    Surely the S&S L-ISA is just like my regular S&S ISA except the L-ISA has an extra 25% thrown in from the government? So better than what i currently have, right?
    I suspect he was meaning people using the LISA wrapper instead of using the pension wrapper. Pension beats LISA for many people.

    Now if i understand it right then he's saying since there'll only ever be yourself putting money into your ISA whereas in a workplace pension you're also getting money from your employer, even if they only ever pay in the minimum then the pension is better.
    Free money from the employer is one thing but its not the only thing that makes it better.
    So let's say you pay in to your 'retirement plan' 20% of your wages. For examples sake, that could be 12% into your workplace pension and 8% into your S&S ISA.
    Or 20% into your pension getting tax relief on the lot and taking the money outside of your estate, getting potentially better FSCS protection, means testing protection and bankruptcy protection. Pension has an earlier age to access too. There are other things.

    For myself i know ISAs can be accessed early (ok the L-ISA can't without penalties) but i wouldn't be accessing a retirement plan until i retire so having the option isn't important to me.
    So, again, pension is looking more favourable.

    However one thing that does bother me is that my dad paid in to his pension all his life. Even paid in extra constantly. He had 3 bad years (poor health) of retirement before he died & due to the age gap between him & my mother she gets a reduced pension on what she would've gotten had the age gap been less.
    Unless you are in a defined benefit scheme, this should not be a concern to you. If you are in a DB scheme, then the contributions are typically lower than those with money purchase schemes. So, you can always fund a life assurance or pay extra into the pension of your spouse to compensate.

    I'm just trying to weigh up whether it's worth running a S&S ISA / S&S L-ISA alongside a workplace pension & since i usually miss the point i figured i'd ask this Q here
    You need to compare the three tax wrappers to see which best fits your objectives. Pension, ISA or LISA.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • JustAnotherSaver
    • By JustAnotherSaver 16th Mar 17, 11:17 PM
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    JustAnotherSaver
    • #3
    • 16th Mar 17, 11:17 PM
    • #3
    • 16th Mar 17, 11:17 PM
    To be honest the workplace pension does sound better for both my wifes and my own needs. Although when i come here for info i'm also doing it for my brother & sister also who never know where to begin. As they are both FTBs i'd say it's best to go with both but only the LISA for house buying really.


    The thing with the pension is the old phrase "eggs in one basket" & whether that is a good thing or not.
    I know some here would urge me to take out my own private pension & manage it myself but i've been over that before - that kind of thing is way beyond me.



    My wife & I both have S&S ISAs at the moment which we are paying in 100pm alongside our workplace pension. I think they're only sitting at about 3k right now each.


    Based on what i've been reading lately & what you've just said as well plus what i'm seeing on the TV about it all (retirement planning) i'm thinking it may be an idea to stop those payments, withdraw it & slipstream it into the pension pot.

    • OldBeanz
    • By OldBeanz 16th Mar 17, 11:31 PM
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    OldBeanz
    • #4
    • 16th Mar 17, 11:31 PM
    • #4
    • 16th Mar 17, 11:31 PM
    In what way is it different managing a S&S ISA and a S&S Pension?
    • zagfles
    • By zagfles 17th Mar 17, 7:01 AM
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    zagfles
    • #5
    • 17th Mar 17, 7:01 AM
    • #5
    • 17th Mar 17, 7:01 AM
    Also if you use an ISA to build retirement savings, and you lose your job, you'll likely not be able to claim any means tested benefits as they'll point to all that capital you have in the ISA. So you might have to spend your "retirement savings" to support yourself through any period of unemployment.

    And as above, if you're happy managing a S&S ISA then why do you think managing a pension is beyond you?? That makes no sense. A personal pension takes less managing than a S&S ISA, and a SIPP is generally the same. Other than the tax treatment & access rules, what's the difference??
    • BLB53
    • By BLB53 17th Mar 17, 9:21 AM
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    BLB53
    • #6
    • 17th Mar 17, 9:21 AM
    • #6
    • 17th Mar 17, 9:21 AM
    The max you can put in a LISA will be 4,000 p.a. (333 pm) and this will be made up to a max of 5K by HMRC however the penalties for withdrawal before age 60 need to be fully understood as the penalties will apply to any accumulated growth from the investment growth.
    "A low-cost index tracker is going to beat a majority of the amateur-managed money or professionally managed money" Warren Buffett
    • Andy1977
    • By Andy1977 17th Mar 17, 1:28 PM
    • 15 Posts
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    Andy1977
    • #7
    • 17th Mar 17, 1:28 PM
    • #7
    • 17th Mar 17, 1:28 PM
    I do think there is a case for using a LISA for retirement savings in some scenarios. In my case I am saving aggressively to hopefully put myself in a position where early retirement becomes an option in my fifties. I already contribute more than enough to my employer pension to ensure I get their maximum contribution. I am also planning on saving the full 20k in my ISA allowance next year (through my salary and other non-isa savings I have). As I was planning on doing that anyway, why not use the LISA to get the additional 1k from the government? Although I can't access this money until 60, I see this as a way of ring-fencing some of my savings to help fund from age 60 until I draw on my pensions.

    I appreciate the other factors that have been raised regarding benefits but as I am building up savings anyway, and I feel fairly secure in my job, this is of less concern to me.

    Obviously everyone's circumstances are different but in my situation having a pension, isa savings and also a LISA seems like a good way of getting where I want to be with a degree of diversification (of savings vehicles at least).
    • JustAnotherSaver
    • By JustAnotherSaver 17th Mar 17, 2:04 PM
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    JustAnotherSaver
    • #8
    • 17th Mar 17, 2:04 PM
    • #8
    • 17th Mar 17, 2:04 PM
    I'm at work right now so I'm going to have to keep my reply short & sweet but to stop anyone else being confused etc...

    Where did I say I was happy managing my S&S ISA?

    • zagfles
    • By zagfles 17th Mar 17, 2:34 PM
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    zagfles
    • #9
    • 17th Mar 17, 2:34 PM
    • #9
    • 17th Mar 17, 2:34 PM
    I'm at work right now so I'm going to have to keep my reply short & sweet but to stop anyone else being confused etc...

    Where did I say I was happy managing my S&S ISA?
    Originally posted by JustAnotherSaver
    Well you have one, so who's managing it? Are you paying someone to? Or are you unhappily managing it
    • JustAnotherSaver
    • By JustAnotherSaver 17th Mar 17, 8:42 PM
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    JustAnotherSaver
    Well you have one, so who's managing it? Are you paying someone to? Or are you unhappily managing it
    Originally posted by zagfles
    Right i'm at home on my PC now so i can reply to it better.

    Regards my S&S ISA ... i knew i needed to do something for retirement. I was about 28 & had nothing in place. I understood bank accounts & savings accounts perfectly fine, chasing rates etc but i didn't understand S&S ISAs at all. Where to invest, when to move the money, so on & so forth, even after reading plenty & getting books from the library to try & learn more.

    So i went & saw an IFA. I wasn't impressed.

    Then i saw a different IFA & felt better with this guy. I was advised at the time to go the S&S ISA route rather than a pension. This was also because i was looking to buy my first house so he said that if i needed the money it'd at least be available.

    I paid him 100 to set it up with 100 monthly payments & then he or one of his team i guess decide where that 100 goes based on my attitude to risk which we went over. They decide when to keep it where it is, when to move it elsewhere etc etc.



    Now i know to many on here that is a criminal offence, but for some unknown reason, many people on here don't seem to listen when i say i have literally no clue where to begin with investing. It's all well & good these people knowing what they're doing, but i don't.

    So all i do is give up 100 per month. I'm not actually managing it.

    Yeah sure i may be able to do better myself but i have no confidence in that at all.




    Still, based on what i've read lately & also what has been said here about it, i'm thinking more of withdrawing that money & slipstreaming it into my workplace pension and having that as my sole retirement plan.

    • zagfles
    • By zagfles 17th Mar 17, 8:50 PM
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    zagfles
    Right i'm at home on my PC now so i can reply to it better.

    Regards my S&S ISA ... i knew i needed to do something for retirement. I was about 28 & had nothing in place. I understood bank accounts & savings accounts perfectly fine, chasing rates etc but i didn't understand S&S ISAs at all. Where to invest, when to move the money, so on & so forth, even after reading plenty & getting books from the library to try & learn more.

    So i went & saw an IFA. I wasn't impressed.

    Then i saw a different IFA & felt better with this guy. I was advised at the time to go the S&S ISA route rather than a pension. This was also because i was looking to buy my first house so he said that if i needed the money it'd at least be available.

    I paid him 100 to set it up with 100 monthly payments & then he or one of his team i guess decide where that 100 goes based on my attitude to risk which we went over. They decide when to keep it where it is, when to move it elsewhere etc etc.



    Now i know to many on here that is a criminal offence, but for some unknown reason, many people on here don't seem to listen when i say i have literally no clue where to begin with investing. It's all well & good these people knowing what they're doing, but i don't.

    So all i do is give up 100 per month. I'm not actually managing it.
    Originally posted by JustAnotherSaver
    You don't have to manage it! You can get the IFA to. Why are you thinking that you need to manage your own pension if you have an IFA to manage your ISA? IFAs do manage pensions, you know! They can also advise you re the workplace pension (and should be doing so).
    • JustAnotherSaver
    • By JustAnotherSaver 17th Mar 17, 9:02 PM
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    JustAnotherSaver
    You don't have to manage it! You can get the IFA to. Why are you thinking that you need to manage your own pension if you have an IFA to manage your ISA? IFAs do manage pensions, you know! They can also advise you re the workplace pension (and should be doing so).
    Originally posted by zagfles
    I don't...? You've lost me totally. Where did i say that i thought an IFA couldn't manage my pension? I'm not trying to be difficult here but i'm wondering if you've read my post?

    This thread was made about the comparison of a Lifetime ISA and a pension, primarily a workplace pension since that's the one i currently have.

    Now in the other thread (the 32yr old with no provisions) i did ask about why the 'need' for a private pension as well as a workplace pension (since he seems to be in a similar boat to myself, similar age, minus the fact he earns double what i do) but i've literally only just made that post in that thread.

    Maybe i've said something in a poor way that's confused you? But i don't know why you think that i think i have to manage my own pension?

    • zagfles
    • By zagfles 17th Mar 17, 9:19 PM
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    • 9,736 Thanks
    zagfles
    I don't...? You've lost me totally. Where did i say that i thought an IFA couldn't manage my pension? I'm not trying to be difficult here but i'm wondering if you've read my post?

    This thread was made about the comparison of a Lifetime ISA and a pension, primarily a workplace pension since that's the one i currently have.

    Now in the other thread (the 32yr old with no provisions) i did ask about why the 'need' for a private pension as well as a workplace pension (since he seems to be in a similar boat to myself, similar age, minus the fact he earns double what i do) but i've literally only just made that post in that thread.

    Maybe i've said something in a poor way that's confused you? But i don't know why you think that i think i have to manage my own pension?
    Originally posted by JustAnotherSaver
    Yes you have confused us. Who here has said or implied it's a "criminal offence" not to manage your own pension? Or that you should be managing your own pension? That's what seems to have confused us. You seemed to be saying that's what you'd have to do.

    If you want the pros and cons if pensions vs ISAs I think you've had your answer? But you're paying an IFA, they can advise you based on your entire personal financial situation.
    • JustAnotherSaver
    • By JustAnotherSaver 17th Mar 17, 10:04 PM
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    JustAnotherSaver
    Yes you have confused us. Who here has said or implied it's a "criminal offence" not to manage your own pension? Or that you should be managing your own pension? That's what seems to have confused us. You seemed to be saying that's what you'd have to do.
    Originally posted by zagfles
    Ah then that's where we have crossed wires.

    What i was basically saying is that i've been here (MSE) before on the topic of retirement planning. The feedback i get is generally do it yourself, don't see an IFA, don't pay for anyone to manage it because you can do it yourself.

    That's not actually something i agree with. The individual telling me that may be able to do it themselves but >I< don't feel like >I< can.

    Sure i can hop onto Hargreaves Lansdown now, open up an account & select a few funds the same way my wife might pick a horse at the Grand National - it may have pretty colours or a funny name, well the funds might be [whatever] but i don't actually know anything about them, it'd totally be stabbing in the dark.

    And that is why i pay someone to do it for me.



    Although i am interested in whether a private pension (managed by an IFA) alongside a workplace pension is better/worse than just going 100% workplace pension.

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