SIPP or ISA Funds ?

tali

I started LGPS at age 32 and due to redundancy now at 46 it has been frozen.Now , as i was part time the pension ain't much.So, given my age should i SIPP or am i better off investing in ISA funds?

atush

is isnt' either or it is generally both. It is how much to each?

However this depends on things you have not said. Redundancy money, was it over 30K? If less what did you are you doing with it? Spouse? Dependents Other savings? New job yet?

I would say, if you have no debt, Own a home (with or w/o mtg) and have savings to cover 6 months spending (having been made redundant you know why we say this now) then I would consider pension going forwards. If you want a sipp or a regular personal pension would depend on if a sipp is the right thing for you- it i generally ore specialist for experienced investors so you could be better off in a personal pension.

Then we get to how much you have saved outside of pension. If nothing other than a cash emergency fund, and you have things you want to pay for in 10 years or so before you pension can be accessed, then I would think of splitting funds between pension and S&Sisa.

tali

Redundancy money was sadly nowhere near 30k .I've got more than enough for a rainy day and beyond-i'm very focused- for example i have about 15 credit cards(it could be 115 ) -i have had them for 13 yrs and always used them and always paid in full- never one penny in intrest.I 've been unemployed previously for a solid 10 yrs - never even owed 1p in debt
My only debt is mortgage and i have paid off 75% of it in 8 years.
I already have ISA Funds.But with pensions they always bang on about starting early and 46 seems late to me.Yes i have 5 dependants.

kidmugsy

Why not invest in ISAs until the terms improve for pensions: e.g. you turn 55, or the tax relief increase to 30%, or whatever?

tali

Have to admit i prefer ISAs because they are not "age critical" like Pensions- and if i understand correctly about them you lose out a lot by not starting early.

jem16

tali wrote: »

and if i understand correctly about them you lose out a lot by not starting early.

Investments within an ISA and a pension will perform in exactly the same way so this is not something that will make a difference in your choice. The only difference between the two tax wrappers is how the tax is handled.

Age can be a consideration but that's the whole point of the pension as it's meant for retirement.

xylophone

started LGPS at age 32 and due to redundancy now at 46 it has been frozen.

Not frozen - it will revalue in deferment.

http://www.lgps.org.uk/lge/core/page.do?pageId=101760

You are not earning? You can still invest up to £2880 into a pension and receive tax relief of £720, bringing your contribution up to £3600.
A stakeholder might suit.
http://www.cavendishonline.co.uk/pensions/stakeholder-pensions/

You might also consider a stocks and shares ISA as you have already built a cash rainy day fund.

Are you using the best current account(s) for your circumstances?

jamesd

S&S ISA is temporarily better while we see what the election abnd subsequent Budgets up to April 2016 do or what plans the new government announces. This is because some parties have proposals to increase the tax relief on basic rate. For higher rate income tax payers this is reversed for their higher rate income and the incentive is to contribution while they can be sure the relief is around.

wooder

jem16 wrote: »

Investments within an ISA and a pension will perform in exactly the same way so this is not something that will make a difference in your choice. The only difference between the two tax wrappers is how the tax is handled.

A related question that I'm not sure about.... is there also a difference in ease of use and costs ?

Ie. with an isa you can just take the money as and when with no charges but with a pension do you not have to 'get permission' from the provider to take your money which will then attract a setting up fee for doing so (and if they don't allow it, face the hassle of transferring to one which will) and possibly have to consult an IFA as well, if the provider insists on it, again, with a fee attached ?

dunstonh

tali wrote: »

Have to admit i prefer ISAs because they are not "age critical" like Pensions- and if i understand correctly about them you lose out a lot by not starting early.

Pensions are designed for retirement and "generically" only retirement. If you put money into an ISA to use in retirement then you have the same age issues as it is money put aside for the same period.

Your second point is wrong. Whatever option you choose is impacted by not starting early. If you need £500,000 in a retirement fund and use ISAs it will cost you more each month if you start 10 years later. If you need £500,000 in a retirement fund and use pensions it will cost you more each month if you start 10 years later.

A related question that I'm not sure about.... is there also a difference in ease of use and costs ?

ISAs and pensions can have the same funds, the charges and get the same performance. The only differences are tax and maturity process.

Ie. with an isa you can just take the money as and when with no charges but with a pension do you not have to 'get permission' from the provider to take your money which will then attract a setting up fee for doing so (and if they don't allow it, face the hassle of transferring to one which will) and possibly have to consult an IFA as well, if the provider insists on it, again, with a fee attached ?

If you use a pension in the IFA market then that may be a case if you want a high risk income option. If you use a DIY provider then it is not the case (although the FCA is carrying out a review into the DIY market later this year and one of the concerns is the ability to transact high risk transactions without sufficient safeguards and whether some DIY providers are crossing the advice line with their offerings).

It should also be noted that IFA providers are often cheaper than DIY. DIY still allows commission to be paid. So, a non-commission option with a fee can be cheaper than a commission option. This is especially noticeable on annuities but can apply to other products as well.

atush

Have you got another job? What is their pension like? Join it?

If you haven't started working yet, then save in cash and S&S isas until you do. Then pension.

W/o any work, you have a lot of dependents, i'd make sure you have some term life insurance too.