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I S A or pension for 21yr old

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sijohnson
sijohnson Posts: 4 Newbie
in ISAs & tax-free savings
My son has asked whether to join a private pension scheme, I am advising an ISA may be a safer option, any opinions?

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  • jem16
    jem16 Posts: 19,586 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    sijohnson wrote: »
    My son has asked whether to join a private pension scheme, I am advising an ISA may be a safer option, any opinions?

    What kind of ISA are you talking about? If cash ISA that's no good for long term retirement planning. If S&S ISA the exact same investments are available in both.

    Also what do you mean by safer and why would he want safer?

    In reality having a mixture of pension, S&S ISA, cash ISA, cash is usually best.
  • dunstonh
    dunstonh Posts: 119,641 Forumite
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    There is no difference in safety between ISA and pensions. Both tax wrappers have identical investment options (i.e. the same investment in the ISA and pension will have the same returns and same risk level.

    I assume you are not talking about cash ISAs as you wouldnt want a 21 year old using those for retirement planning.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • oldtractor
    oldtractor Posts: 2,262 Forumite
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    my son of a similar age does both,a bit invested in each.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    sijohnson wrote: »
    My son has asked whether to join a private pension scheme, I am advising an ISA may be a safer option, any opinions?

    Not much in it safety wise. If I log in to my retirement savings web site, I can see my SIPP (self invested personal pension), my ISA and my other investments. With only a few restrictions, mainly to the ISA, I can hold anything anywhere, so all that's different is the tax treatment and when and how I can access the money.

    Ignore safety and concentrate on tax and access.

    Feel free to ask more question, but first a few for you. Does your son's company contribution to his pension? Does he have other savings?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • sijohnson
    sijohnson Posts: 4 Newbie
    His company would contribute but realistically he probably will not be with them beyond 10 yrs, he hasn't got any other saving plan as yet, he is just clearing a car loan and wants to save the amount he was paying on the loan into some kind of savings plan.
  • jem16
    jem16 Posts: 19,586 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    sijohnson wrote: »
    His company would contribute but realistically he probably will not be with them beyond 10 yrs,

    If the company contributes then he should join asap rgardless of how long for. It's free money.

    How much does he need to contribute and how much will the employer contribute?
    he hasn't got any other saving plan as yet, he is just clearing a car loan and wants to save the amount he was paying on the loan into some kind of savings plan.

    He should of course try to get at least 6 months wages saved as well.
  • dunstonh
    dunstonh Posts: 119,641 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    His company would contribute but realistically he probably will not be with them beyond 10 yrs, he hasn't got any other saving plan as yet, he is just clearing a car loan and wants to save the amount he was paying on the loan into some kind of savings plan.

    So, 10 years of free money from the employer. Nothing beats free money.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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