Need to start something asap

greenglide

Skibunny40 wrote: »

Will there be a set date in 2028 eg. 5th April 2028 as a cut-off point?

Would rely on that date being the same in 14 years time? I wouldn't rely on the year never mind the month or day.

bigadaj

MFW_ASAP wrote: »

Hence why I said for medium and short term savings, ISAs are still valuable. For retirement savings the discussion is essentially over (except perhaps for those few fortunate people who can retire before age 55). Much better to save in a pension, especially for high rate tax payers. 40% tax rebate on the way in and 20% on the way out. I wonder how long the 40% tax rebate will last when they realise?

I haven't seen any reference to further increasing the age restriction from age 55, can you please provide a link?

But you seem to have specific pots for short, medium and long term savings, many people won't.

You're also assuming that life will ona out exactly as you predict and that doesn't happen for many, death, debt, divorce, redundancy etc can have a major impact in the plans for large numbers of people.

Triumph13

amandajc wrote: »

Would I be right in thinking that S&S ISAs are still the best option for those of us with long standing, final/career average, public sector pension hoping to fund early retirement? I'm 55 and a basic rate tax payer and hoping to defer my LGPS pension till normal retirement age at 66 but stop work at 60. (My pension would be reduced by around 27% if I took it at 60). I'm currently working hard at boosting my existing capital inside a S&S ISA.

I don't see that anything announced yesterday changes things for me (apart from the fact that I have 2 small pensions that I can take at 60 and which I may have more flexibilty with). Am I missing something? Should I be thinking about a SIPP instead of the ISA? I'm able to invest about £7,000 per year.

Many thanks for any thoughts.

The budget changes have hugely moved it in favour of pensions for someone in your position. You will now have exactly the same flexibility as with the ISA to use up all the money saved to cover that 6 year period, in the 6 year period - but with the added advantage of tax relief on the way in and tax free on the way out for 25% of the pot plus up to your personal allowance each year.

amandajc

Very many thanks Triumph. I was thinking maybe that was the case. I have been paying a small amount into a free standing AVC with the Co-Op for about 10 years now that I can take at 60 (I took it out as I wasn't sure how long my job with the County Council would last). Maybe it's time to increase payments rather than put all my spare cash into my S&S ISA.

MFW_ASAP

bigadaj wrote: »

But you seem to have specific pots for short, medium and long term savings, many people won't.

You're also assuming that life will ona out exactly as you predict and that doesn't happen for many, death, debt, divorce, redundancy etc can have a major impact in the plans for large numbers of people.

People who don't have short-term (emergency savings) are unlikely to have long-term (pension) savings and so the point is moot. For those who are saving purely for retirement, there can no longer be any argument in favour of ISAs against pensions.

The life-changing events you mentioned are all equally served by pensions and ISAs, indeed better to have retirement money in a pension when made redundant, in debt or too sick to work as this will not be means-tested for benefits, unlike ISAs.

A protracted spell out of work could easily burn through retirement savings in an ISA, leaving you in financial difficulties when you're too old to do anything about it. Debts are the same, if you are declared bankrupt then your ISA savings are at major risk, a pension is secure from bankruptcy.

The only argument for using ISAS for retirement savings were that they were yours to control, you didn't have to use them to buy an annuity and you could pass them on in your estate when you die. All of which you can now do with a pension.

The only slight downside is that you have to wait until you're over 55 to get your hands on it, but then they are RETIREMENT savings so unless you're wealthy enough to retire at 55, then it's unlikely you'll need access to your retirement money before that age.

If I had my retirement savings in ISAS, I would seriously consider moving them into a pension straight away, gaining the valuable tax rebate and retirement security.

bigadaj

Still seems a knee jerk reaction, I prefer balance.

Whilst this is teh pensions board, then life also needs to be lived, I could never understand the view of working all hours in your twenties and thirties to retire in your fifties, that money and time is more valuable the younger you are in my opinion. Is far prefer to have a better time when I'm younger, and if teh care home and your view on life isn't good in your eighties or older then there's always a way out.

The question of redundancy is also an all or nothing perspective, most people would only be out of work for a relatively short period and not reliant on benefits for any length of time, or not qualify for them Because of other assets.

You are also really only deferring tax in the main for teh majority of people. There's potential for real advantage in salary sacrifice schemes but less so if not.

MFW_ASAP

bigadaj wrote: »

You are also really only deferring tax in the main for teh majority of people. There's potential for real advantage in salary sacrifice schemes but less so if not.

Only if you exclude the 25% tax free lumps sum, and the potential of managing your retirement finances so that you're under the £10k (or whatever it will be when we retire) tax threshold.

elantan

My intention is to have a pension up to the tax threshold and draw down savings tax free from an USA for the rest of my money, my company only has a NEST pension so I am only getting 1% paid in by them, I do have other pension arrangements but it is only me ( and the tax man) that is contributing to them, I am also only a 20% tax payer so will not get any benefit from the 40% tax bracket, I think my wages next year if I don't do any overtime will mean I won't pay any tax at all (I earn less than £10.5k basic)

So for me it's still advantageous to have both an isa and a pension

Everyone needs to figure out what is the best situation for themselves though

I think I may actually be better off when I retire ... Cause heaven knows I can't be much worse off than I am just now