7% pa return over 30-40 years

planteria

atush wrote: »

I don't think PPs are a bad deal, they are exactly the same as ISAs in that they are a tax wrapper.

And if all your outside savings are in ISAs, then when you retire your PP could be tax free as it would use all of the PA until SP age comes.

but if yatinsardana wants to invest alongside his NHS pension, which option to use. i can understand the choice of an ISA. if he can max his ISA and have more spare, then a private pension of some kind? is there a good case for using a pension Prior To filling up his ISA allowance?

yatinsardana

planteria wrote: »

but if yatinsardana wants to invest alongside his NHS pension, which option to use. i can understand the choice of an ISA. if he can max his ISA and have more spare, then a private pension of some kind? is there a good case for using a pension Prior To filling up his ISA allowance?

I agree

Personally I think if one goes for the NHS pension scheme (or whichever their occupational pension scheme is), then any investment or savings alongside should be in an ISA instead of a private pension. It gives you a good balance between having a pension plan sorted for the future and also having money that is accessible to you if need be before turning 55. Having all your money in pension plans will make you too restricted and won't give you any flexibility.

Triumph13

yatinsardana wrote: »

I agree

Personally I think if one goes for the NHS pension scheme (or whichever their occupational pension scheme is), then any investment or savings alongside should be in an ISA instead of a private pension.

I would argue that this is a much more complex decision based on individual circumstances. In many cases the best option will be a blend of DB pension (for those lucky enough to get one), PP and ISA. It's a very complex trade off between the flexibility of the ISA and the tax advantage of the PP. Just as an example, an early retirement strategy might be based on living on ISA capital together with the TFLS from the PP plus drawdown until you reach the age where you can take the DB scheme without reduction. The remaining drawdown funds then supplement the DB to partly make up for the reduced number of years service accrued by retiring early.

planteria

yes, i'm with you. i still think there is something tempting about the ISA allowance. the 'when it's gone it's gone' concept guides me to make that a first priority, then a pension contribution. i only have a DC pension though:think:

atush

planteria wrote: »

is there a good case for using a pension Prior To filling up his ISA allowance?

Yes, as if ALL savings ate in ISA you wont use your PA and it is wasted.

I personally would split extra money between the two. At least until there is a Pot big enough to buy at least 3-5K of pension income.

yatinsardana

atush wrote: »

Yes, as if ALL savings ate in ISA you wont use your PA and it is wasted.

I personally would split extra money between the two. At least until there is a Pot big enough to buy at least 3-5K of pension income.

Stupid question - what's PA? :$

westy22

yatinsardana wrote: »

Stupid question - what's PA? :$

Personal Allowance

jem16

planteria wrote: »

but if yatinsardana wants to invest alongside his NHS pension, which option to use. i can understand the choice of an ISA. if he can max his ISA and have more spare, then a private pension of some kind? is there a good case for using a pension Prior To filling up his ISA allowance?

If yatinsardana was to become a higher rate taxpayer then yes I would say utilise the PP before the ISA. Hopefully it would be 40% tax relief and 20% tax to pay in retirement.

However if still a basic rate taxpayer, then I would say utilise the ISA before the PP as, apart from the 25% tax-free lump sum, it would be 20% tax relief and 20% tax to pay in retirement as the pension from the main NHS scheme will more than use up the tax-free personal allowance.

planteria

atush wrote: »

Yes, as if ALL savings ate in ISA you wont use your PA and it is wasted.

I personally would split extra money between the two. At least until there is a Pot big enough to buy at least 3-5K of pension income.

thanks guys.

i don't quite follow why it is deemed so desirable to utilise a personal allowance.

i can see the logic of getting the uplift on pension contributions, though...yes, 40% on way in & only paying 20% on the income it generates works nicely, but i wouldn't want to reign in performance to try to ensure it;)

planteria

and why 3-5k atush?