pension or isa

steviegee50

will be 50 in june and was thinking off taking my pearl pension. its about 12000 i can get 3000 tax free and was thinking off putting what i get monthly into a cash isa for 15 years till i retire. i am currently working and paying into a works pension .is this a good idea

EdInvestor

It woud probably be better to take the pension in a different way, by putting it into "income drawdown", rather than taking a taxable annuity which will be poor value as you are very young.

With drawdown you can take the 25% tax free cash but leave the 75% inside the pension (typically a SIPP) so it will grow tax free until you need it .

You do need to check however if there are any guarantees attached to the Pearl pension which you would lose if you left early.

dunstonh

Its almost certainly a bad idea. Pearl dont allow income drawdown so you would have to commence the income if you used them. At age 50 you will get awful rates. You will also reduce the death benefits (may be important to you).

Pearl retirement annuity contracts have guaranteed annuity rates which are typically around 50% higher than market rates. They kick in at age 60 and increase every 5 years thereafter. The rest of their post 88 pensions are universally rubbish. Yet to find one not worth transferring (bar those with redress guarantees).

If you dont need the money then commencing benefits which turns a pension from being tax free into taxable just so you can put 25% into a cash ISA is a bad idea. Transfering it to a better provider and keeping it in the pension is a much better idea.