ISAs v Pensions: The Official Retirement Debate

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  • atush
    atush Posts: 18,726 Forumite
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    Any reason you are pulling up very old posts Paul?

    Not trying to get up to link status?
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    atush wrote: »
    Any reason you are pulling up very old posts Paul?

    Not trying to get up to link status?

    Seems to be an ifa, rather than a spammer, so an appropriately worded footer stating this interest and also limitation of liability in terms of comment rather than advice might be appropriate.
  • EternallyGrateful
    EternallyGrateful Posts: 127 Forumite
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    Seems like I'll have to have a word with my IFA - apparently he should have told me to invest all my money into a pension fund!
  • dunstonh
    dunstonh Posts: 116,387 Forumite
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    Growth on ISAs and pensions would be the same.
    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.
  • atush
    atush Posts: 18,726 Forumite
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    Apart from the extra compound interest on the tax uplift portion.
  • dunstonh
    dunstonh Posts: 116,387 Forumite
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    The pension will be exactly 25% higher due to the 20% tax relief. The growth rates will be the same though.
    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.
  • atush
    atush Posts: 18,726 Forumite
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    the growth rates will be the same, but the growth on the extra 25% would mean more cash in the end.
  • dunstonh
    dunstonh Posts: 116,387 Forumite
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    atush wrote: »
    the growth rates will be the same, but the growth on the extra 25% would mean more cash in the end.

    It will be 25% higher. There is no compounding gain. that pushes that extra 25% higher than 25%.

    £10,000 into pension
    £8000 into ISA.

    Growth rate of 100% over the term means £20,000 into the pension and £16000 in the ISA. Difference remains 25%.
    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.
  • atush
    atush Posts: 18,726 Forumite
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    yes, as I said the % remains the same, but the outcome is more interest ie 4K in your example.
  • maximumgardener
    maximumgardener Posts: 299 Forumite
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    proposed future pension changes/ green paper will be an interesting debate and no doubt get very careful consideration by George Osborne over next couple of months.
    one thing they need to achieve however they change goalposts (& change them they may!) is they must keep Pensions attractiveness "High" or make them even more attractive especially to those earning least! face it, rightly or wrongly Pensions are seen as too complex by many and needs simplified somehow. ISA's will probably continue to be part of the equation for overall income planning in retirement, I reckon.
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