Pension or ISA/Savings

sleepyfrog

I'm single, 46 and self-employed but am not earning enough to pay tax, with 2 small children and no other dependents or income.
I have an old pension which I ceased paying into years ago whose value at the moment is £19,500

An endowment policy is just about to mature for around £15,000.

The thing is, I don't like the idea of my money being tied up in a pension and only being allowed 25% after 55 if I need it, but appreciate the tax benefits although I don't know how much that would benefit me. If I died would my children get anything or would the pension/annuity company keep the lot?

Would it be better for me to put the majority into the pension or open a cash ISA before April and put £11k in that and the rest in a Stock ISA?

Would I get any tax relief added to the pension even when I am not eligible for tax?

I want to provide some kind of security for my kids as I'm all they have, but don't want my money to go to big business if I got knocked over by a bus!

Obviously when I get the money I shall take expert advise, but just want to get some idea of the direction I should be looking at/investigating.

Thanks

atush

The beneits of a pension are 1 employers contributions and 2 tax relief. At basice rate tax (or as a non taxpayer) every 80 into a pension becomes 100 immediately. Does it sound better now?


Your children would inherit 100% of your pension fund should you die before you take it. Does that make it sound better now?


Pensions are not taken into acct (unlike Cash savings and ISAs) for means tested benefits. Does this make then sound better?


If you want to take care of your children in t he event of your death, consider Life insurance. If you haven't write a will, and choose a guardian. Contact your pension company and list your children as beneficiaries if you haven't already.


In your case, as a single parent, saving for immediate and medium term savings are very important. So make sure you have at least 6 months outgoings in cash deposits, and make sure you are paying voluntary SE nics unless your youngest is under 12. After your youngest is 12 and over, pay SE nics so you get the full SP until you have 35 years of contributions.


once you have done this consider putting extra savings between a pension and S&S isas.

Yorkie1

sleepyfrog wrote: »

Would it be better for me to put the majority into the pension or open a cash ISA before April and put £11k in that and the rest in a Stock ISA?

You can only put £5,760 into a cash ISA this tax year (i.e. 50% of the overall subscription limit for a year).

atush

S&S isa over cash for the long term. But not short term