Is this adequate?

dunstonh

BTW isn't the ISA limit only £3000 per annum? compared to £3600 for pensions?

When comparing ISAs vs pensions, you generally compare equity ISAs (either 4k mini or 7k maxi) rather than cash ISAs. Unless you are Deemy that is

EdInvestor

ftbworried wrote:

Well, the way I saw it is that if you get tax relief NOW, then you earn 'interest' on that tax... so when they take it back from me in 40 years time i will only have to give them what they have 'invested', I get the interest that I have made on the tax 'investment'?

Nope.There is no extra gain from the tax relief apart from the 25% TFC.

If you get tax relief @ the 40% rate and then pay tax @22% in retirement of course there is an additional gain. [BTW don't forget you have to claim the extra 18% relief via your tax return if the pension is a personal one.]

exil

Can't we resolve this ISA v pension duel with some illustrations?

1. Invest 7k for 40 years in a pension.

Total cost, 280k. Tax relief, about 80k.

Final value - about 700k at a return of 3% above inflation.

25% tax free lump sum. 180k.

520k left to buy an annuity.

ISA. 7k a year for 40 years.

Cost 280k.

Return - 530k. So, about the same as available from the pension - but
the pension has already given you the 180k tax free lump sum!