ISAs v Pensions: The Official Retirement Debate

dmliverpool

I'm arguing the principle of saving regularly as cheaply as possible vs a more pragmatic pension system that isn't as straight forward as they first seem.

dunstonh

dmliverpool wrote: »

I'm arguing the principle of saving regularly as cheaply as possible vs a more pragmatic pension system that isn't as straight forward as they first seem.

ISAs and pensions have virtually the same investment options at the same cost. Indeed, pensions can actually offer lower cost options in some areas.

So,the choice of tax wrapper makes no difference to investment or cost.

WeaponX

My question with pensions, is that if you move from company to company and take out a pension with each company you join. Is still it worth it? And what happens to the pension when I leave each company? Is it worth having a single personal pension?

jem16

WeaponX wrote: »

My question with pensions, is that if you move from company to company and take out a pension with each company you join. Is still it worth it?

Definitely worth it if the employer is also contributing.

And what happens to the pension when I leave each company?

You leave it where it is until retirement or transfer it into your new scheme if that is possible and better.

Is it worth having a single personal pension?

It doesn't really matter whether you have one pension or six.

Paul_Herring

jem16 wrote: »

It doesn't really matter whether you have one pension or six.

Pension or 'pension fund'?

jem16

Paul_Herring wrote: »

Pension or 'pension fund'?

Pension.

It's always a good idea to have a spread of funds within the pension if defined contribution.

WindfallWinnie

I would be interested in the thoughts of people on this forum:

If you were a higher rate tax payer and were in the position of being able to put in a lump sum of £60k in this tax year and £40k next year would you do it?

Take into consideration a private pension pot valued at £175k and that the maximum amount would also be put into ISAs.

dunstonh

If you were a higher rate tax payer and were in the position of being able to put in a lump sum of £60k in this tax year and £40k next year would you do it?

It is very common for higher rate taxpayers or those who own their companies to put £50k in a year.

You may not be able to put £60k in unless you qualify under carry forward rules.

jamesd

Depends on whether you need the money outside the pension, say to draw on at a higher rate than the pension rules allow.

If you're close to being 55 the pension option looks very attractive because you can take the tax free lump sum and income as soon as you reach 55, then start recycling the income into a pension again for a second chunk of higher rate tax relief. Note that this would reduce the money inherited and you might need to add some life assurance if that matters to possible dependents.

This looks like a fairly good time to be investing, spreading the actual buying of investments out over the next year to reduce risk, at the cost of reducing potential gains.

If you were a member of a pension scheme last tax year or in the previous three and didn't put in £50,000 during one of those years you may have some carried forward allowance to use to let you get to £60,000 this year, check the detailed rues. Since you have a private pot and given its value the chances are that you do qualify to use carry-forward unless you've put in a lot to get to £175,000 over the last few years.

atush

WindfallWinnie wrote: »

I would be interested in the thoughts of people on this forum:

If you were a higher rate tax payer and were in the position of being able to put in a lump sum of £60k in this tax year and £40k next year would you do it?

Take into consideration a private pension pot valued at £175k and that the maximum amount would also be put into ISAs.

Yes, I would.:D