ISAs v Pensions: The Official Retirement Debate

gingerpo

Thanks EternallyGrateful

'If you're not a tax payer you can still pay £2880 into a pension fund and the pension provider will credit your 'pension account' with £3600 which represents the tax relief.'

so just to clarify, does that mean 2880 + 3600 goes into the pension fund or 3600 including my contribution and the tax relief?

'"Average growth" data on pension funds will not help you. If I have one foot in the freezer and one foot on a hot plate on average I'm quite comfortable.'

LOL - I see your point and I did think it might be a stupid question. Decisions would be so much easier if it was an answerable question!

I have looked for an IFA but they all seem to require their clients to have at least 50,000 pounds in savings - i don't qualify!

still, I'm making progress and I know a lot more now about pensions than I did 3 days ago!! I'll keep plodding on through it all but can't do much more now until i talk to my pension provider.

EternallyGrateful

gingerpo wrote: »

Thanks EternallyGrateful

'If you're not a tax payer you can still pay £2880 into a pension fund and the pension provider will credit your 'pension account' with £3600 which represents the tax relief.'

so just to clarify, does that mean 2880 + 3600 goes into the pension fund or 3600 including my contribution and the tax relief?

'"Average growth" data on pension funds will not help you. If I have one foot in the freezer and one foot on a hot plate on average I'm quite comfortable.'

LOL - I see your point and I did think it might be a stupid question. Decisions would be so much easier if it was an answerable question!

I have looked for an IFA but they all seem to require their clients to have at least 50,000 pounds in savings - i don't qualify!

still, I'm making progress and I know a lot more now about pensions than I did 3 days ago!! I'll keep plodding on through it all but can't do much more now until i talk to my pension provider.

Minimum tax rate is currently 20% and 20% of £3600 is £720. So you pay £2880 and HMRC 'pay' £720. So the total sum being paid into your pension fund is £3600.

My IFA did not require me to have £50k.

atush

Another thing is, look at pensions in the country you are working in, and paying tax in. They might have a scheme that would save you tax there. If not, look at investing into equities, once you have a good cash buffer. you don't need a tax wrapper to do this, but you wont get tax relief.

In the meantime, you can make voluntary contributions to the State pension which will mean you can get a UK state pension when you retire.

gingerpo

EternallyGrateful

Last time I was in the UK i went through yellow pages and none of the IFAs in my area were interested. I've been looking on websites and all the ones I've seen so far want clients to have 50,000-250,000 in savings. I don't know where else to look.

Atush
Thanks for the idea. I'll have a look at equities. I'm not sure whether it's worth me paying voluntary contributions because I may not get all or any of my state pension anyway - it will all depend on which country I decide to retire to. Unfortunately, where I am doesn't have pensions.

atush

If you have made contributions in the UK scheme, you can get your pension pretty much anywhere in the world where you live.

The Main difference is, you may not get an annual uplift/indexing depending on where in the world you live. So check that.

Will help to have a UK bank acct so if you have one, keep it open. Better yet, open one with one of the large majors like HSBC that have accts in different currencies and have one in the UK in GBP and one where you live in local currency.

yesitwasme

I'm supprised no one mentioned that with annuities at 5% it will take 20 years just to get your own money back, puts me at 85 !
ISA v Pension = tax today v tax tomorrow

atush

Annuities depend on the type, and I beleive the highest rates are closer to 6%.

If you have an employers pension, your own contributions might be only 1/3 of the fund, so would not take you long at all to see ALL your money back.

As for only living to 85, you are statistically likely to live longer.

dunstonh

yesitwasme wrote: »

I'm supprised no one mentioned that with annuities at 5% it will take 20 years just to get your own money back, puts me at 85 !
ISA v Pension = tax today v tax tomorrow

What you have forgotten is that annuity is not the only option and you should really be comparing capped drawdown on pension with ISAs as both options would remain invested and provide the closest match.

yesitwasme

Think I will go the drawdown route though rules are confusing. Government say you need at least 20k income to qualify and say that a 200k pot will do, sums don't add up there.

What do you spend money on after age 85? Don't think I want to know.....

Can't find anyone paying 6%, for combined index linked more like 3.5 to 4%

Anything to stop you cashing in a pot taking the 25% and opening another with the 25% that would attract 20% tax, trying to find fault with it but can't' I'm sure some of you clever ones will direct me?:)

jem16

yesitwasme wrote: »

Think I will go the drawdown route though rules are confusing. Government say you need at least 20k income to qualify and say that a 200k pot will do, sums don't add up there.

The £20k requirement is only for flexible Drawdown, not Capped Drawdown for which there is no requirement.

Can't find anyone paying 6%, for combined index linked more like 3.5 to 4%

You wouldn't but many using an annuity don't go for combined index-linked.

Anything to stop you cashing in a pot taking the 25% and opening another with the 25% that would attract 20% tax, trying to find fault with it but can't' I'm sure some of you clever ones will direct me?:)

Google pension recycling rules.