Pension advice pls - company contributes

jamesd

zagfles wrote: »

Why are you comparing different tax treatments of interest?

Because you asserted that the timing of when the interest was taken and tax is paid makes no difference, and it does make a difference.

zagfles wrote: »

Maybe we can agree what we're comparing - I thought it was ISAs and pensions not unwrapped and pensions.

It's the options that waterwatereverywhere has. Those include unwrapped investing and savings.

zagfles wrote: »

You get "gross roll up" in an ISA, if you mean you don't pay tax on interest etc.

In an ISA because the money paid into the ISA is paid in net of tax there's not gross roll up in all possible meanings of gross, just the interest/dividends and CGT aspects if investments are sold. The ISA does benefit vs unwrapped because you don't pay tax on the net gains each year, same as the pension. But the full gross roll up, including of the initial money, does give the pension a 6.25% advantage over an ISA when combined with the TFLS. It is also a benefit if there is unused personal allowance.

Your_Hero

jamesd wrote: »

Because you asserted that the timing of when the interest was taken and tax is paid makes no difference, and it does make a difference.

It's the options that waterwatereverywhere has. Those include unwrapped investing and savings.

In an ISA because the money paid into the ISA is paid in net of tax there's not gross roll up in all possible meanings of gross, just the interest/dividends and CGT aspects if investments are sold. The ISA does benefit vs unwrapped because you don't pay tax on the net gains each year, same as the pension. But the full gross roll up, including of the initial money, does give the pension a 6.25% advantage over an ISA when combined with the TFLS. It is also a benefit if there is unused personal allowance.

I've given up explaining gross roll up to them (refer to post #26, the difference in values between the pension and the ISA is the gross roll up in action).


Anyway my beloved MSE posters, let's all draw a line under this, we can argue all day until we're blue in the face but it will make no difference to anything. Time to move on.

jem16

jamesd wrote: »

Because you asserted that the timing of when the interest was taken and tax is paid makes no difference, and it does make a difference.

James - I normally find myself agreeing with you but not here. Zagfiles and I were clearly talking about a pension and an ISA.

zagfles wrote: »

That was covered. The point is the only tax advantage of a pension over an ISA is getting tax relief at a different rate from the tax you eventually pay, whether it be from the TFLS, from the use of the PA, from using higher rate relief, from inheriting tax free before crystallisation etc.

Not from "gross roll up", which implies it's somehow better to have money growing before tax is applied rather than after. It isn't - that's basic GCSE maths.

It's the options that waterwatereverywhere has. Those include unwrapped investing and savings.

There was never any mention of unwrapped investing or savings until now, or indeed when kidmugsy showed the near enough true meaning of gross roll up.

In an ISA because the money paid into the ISA is paid in net of tax there's not gross roll up in all possible meanings of gross, just the interest/dividends and CGT aspects if investments are sold.

Sorry james but you really are splitting hairs now.

In all possible meanings of gross roll up, neither the pension nor the ISA can boast "true" gross roll up.

The ISA does benefit vs unwrapped because you don't pay tax on the net gains each year, same as the pension.

For a basic rate taxpayer, using the wrapped ISA and unwrapped investments ( except of course fixed interest investments) will make no difference. But then we were never talking about wrapped vs unwrapped and you know it.

But the full gross roll up, including of the initial money, does give the pension a 6.25% advantage over an ISA when combined with the TFLS. It is also a benefit if there is unused personal allowance.

Where have I said otherwise?

However again, it's not the gross roll up that's making the difference - it's other factors that gives the pension its marginal edge.

Blackbeard_of_Perranporth

First Boss, Findus.

"Company has subsidised shop, canteen. Sports and Social Club. We also have a pension scheme. If I were you lot, I wouldn't put a penny into it, cause when you retire they'll be nothing left."

As I was under 18 at the time, we were not allowed in the Sport and Social Club.

zagfles

Your_Hero wrote: »

I've given up explaining gross roll up to them (refer to post #26, the difference in values between the pension and the ISA is the gross roll up in action).

Just as well, as you clearly don't understand it or its relevance to any comparison between ISAs and pensions.

it's almost like someone loaning you £20 for each of your £80 you invest, with no interest payable

Sorry but :rotfl:

Anyway my beloved MSE posters, let's all draw a line under this, we can argue all day until we're blue in the face but it will make no difference to anything. Time to move on.

Good idea. Ta ta.