ISA or Pension

whiteflag_3

ISA (5%,7% and 9%) 195,000 , 241,000 , 301,000
Pension 277,000 , 347,000, 437,000

Michaels, thanks for getting the thread back on course

Dunstonh has already pointed out that the tax treatment of the fund is the same.

What I was bringing to the discussion was actual projections on a level playing field. While Deemy is correct in pointing out the risk involved in equity funds , if you look at the projections above and assume cash ISA @ 5% and Cash pension @ 5% the pension fund is £82,000 higher (the benefit of the 22% tax relief). Therefore before making a choice investors need to weigh up the benefits of tax relief against the lack of flexibilty with a pension.

Hold on Im going to post an opinion .......... I think a combination of both ISA and pension is the best way to plan for the future

EdInvestor

Hi whiteflag

Hold on Im going to post an opinion .......... I think a combination of both ISA and pension is the best way to plan for the future

In my opinion this is a correct approach for higher rate taxpayers. The situation will not however be the same for basic rate taxpayers. Do you agree?

Hi dunstonh

We are really crying out for a new pension product that doesnt involve an annuity.

Err, we have one surely, it's called income drawdown? I think this is a fact...;)

oceanblue_3

EdInvestor wrote:

Are you confusing me with an insurance company? The "duty of care" rule is the one which enables a person to lodge a successful misselling complaint even if the company sold the product before 1988. (Unfortunately it doesn't apply to IFAs.)

Of course we all try to get our facts and opinions as correctly expressed as we can when we post on this website.Mistakes can happen to the best of us at times.

The concept of "duty of care" or "standard of care" is, by way of tradition, custom and precedent, enshrined in common law; in fact, as qualified professionals, IFA's are expected to demonstrate a higher standard than, for example, journalists, whose ability to practise is not dependant upon the attainment of any formal qualifications at all.

However, in referring to a "duty of care", I was simply suggesting that we owe it to all posters to be sympathetic to their needs: when asked for help, I point people in the right direction; if I know I can't help, I refer them to someone else who does know the way: I don't guess at an answer................guessing leads to mistakes and, in my work, mistakes can be very costly.

oceanblue_3

EdInvestor wrote:

Hi dunstonh

Err, we have one surely, it's called income drawdown? I think this is a fact...;)

Edinvestor, selective editing will always allow you to bend the facts to serve your purpose; look at what dunstonh actually said and you'll see how cynical your editing has been.

EdInvestor

Hi ob

Can you see this: It's called a "smiley". It represents a wink.It means in this case that I am having a minor joke with DH.


Whereas if you want to use this one : :rolleyes: which indicates that you are trying to convey something along the lines of "For heaven's sake", then you need to type the word "rolleyes" with ":" on either side of it.

Use of smileys is recommended as it helps people to lighten up

whiteflag_3

Hello Ed

In my opinion this is a correct approach for higher rate taxpayers. The situation will not however be the same for basic rate taxpayers. Do you agree?

Not really , i cant see how you can ignore the benefits of tax relief ( as illustrated earlier in the thread).

Try and convince me

deemy2004

Pensions ARE not good investments for people on low pay - They would be far better off putting their money in cash - ISA's , though they will be unlikey to have any cash left over for shares ISA's. They can thus use that with regards where they stand prior to retirement or if their lot improves and they are likely to have a savings pot WELL in excess of the MIG equivalent i.e. about £40k in todays money.

Stakeholder pensions are the biggest con on the low paid yet !.... They would have got that money anyway had they not saved a single penny in a pension plan.

Offcourse - just my opinion

whiteflag_3

deemy2004 wrote:

Pensions ARE not good investments for people on low pay - They would be far better off putting their money in cash - ISA's , though they will be unlikey to have any cash left over for shares ISA's. They can thus use that with regards where they stand prior to retirement or if their lot improves and they are likely to have a savings pot WELL in excess of the MIG equivalent i.e. about £40k in todays money.

Stakeholder pensions are the biggest con on the low paid yet !.... They would have got that money anyway had they not saved a single penny in a pension plan.

Offcourse - just my opinion

Deemy -where did the issue of retirement planning for people on low pay come from . You answered the original poster who said they were a higher rate tax payer with maximise your ISA! YOur posts confuse me

EdInvestor

Hi whiteflag

I think it came from you actually, see post 37

The benefit of tax relief for the basic rate taxpayer works out at about a 7% increase in net retirement income, which few people believe is enough to compensate for loss of control of the capital forever and the other restrictions on access to the fund compared with an ISA.And for the lower paid BRT as Deemy says, the danger is that the person will save money which he would have got anyway in benefits, thus a total waste.

whiteflag_3

EdInvestor wrote:

Hi whiteflag

I think it came from you actually, see post 37

If your referring to low paid I cant see where I refer to it in post 37 ,I think you and possibly Deemy are confusing low paid with basic rate tax payer. Deemy is dead right in what he says about pensions and the low paid, but the original poster is a higher rate tax payer. Given that the higher rate threshold starts @ £32,400, I dont consider £30K per annum as low paid.

The benefit of tax relief for the basic rate taxpayer works out at about a 7% increase in net retirement income, which few people believe is enough to compensate for loss of control of the capital forever and the other restrictions on access to the fund compared with an ISA.And for the lower paid BRT as Deemy says, the danger is that the person will save money which he would have got anyway in benefits, thus a total waste.

Where do you get the figure of only a 7% increase in net income ? Have look @ my projections for funds at 5% growth and do the calculation of what income could be generated from either. I get alot more than a 7% increase from the pension.

which few people believe is enough to compensate

On what statistic do you base this- has a survey been done or for few people should I read Edinvestor?