Stakeholder Pension vs ISA savings

OldGranny

Hi. I'm 62 with a stakeholder pension that matures at 65. Would I be better putting any savings into the pension and receiving 20% tax relief rather than locking it in an ISA for a measly less than 2% interest?
I know the ISA is tax free but is the pension?


Thanks
OldGranny

greendoor665

Yes, investment return within a pension (whether capital growth, interest or dividends) is tax free.

IanSt

The question of where to put your money will depend on how your finances are, what funds your pension is invested in, and how you view the prospect of a sudden downturn in the stock market.

If you will or may need access to this money in the near term then putting it into the stock market is a risky enterprise where equities could easily fall and remain lower for many years.

However if you have enough cash already then the pension is likely to be the best approach. You'll get tax relief on the way in, and I you'll be able to get 25% of it tax free on the way out.

If you do decide to keep this additional money in cash then you can get up to 5% in various current accounts, so don't automatically think you have to put it into an ISA.

bigadaj

OldGranny wrote: »

Hi. I'm 62 with a stakeholder pension that matures at 65. Would I be better putting any savings into the pension and receiving 20% tax relief rather than locking it in an ISA for a measly less than 2% interest?
I know the ISA is tax free but is the pension?


Thanks
OldGranny

The 25% uplift can't be beaten.


If you really need to access this in three years then maybe best left in cash as any market crashes or reductions won't have time to recover.

kidmugsy

bigadaj wrote: »

The 25% uplift can't be beaten.

Maybe. It's possible that youngish people currently avoiding 20% income tax by contributing to pensions will face higher rates when they come to withdraw the money.

It's different for OldGranny but if I were young I wouldn't tie money up for decades to get only 20% relief: I'd want an employer contribution, or salary sacrifice, or preferably both.

xylophone

Are you currently in receipt of earned income?

Have you obtained a new state pension statement?

Have you other pension provision?

https://www.gov.uk/check-state-pension

OldGranny

Thanks for the link.
Just tried the forecast £159 per week which I believe is the maximum and I am quite pleased about because I worked for a Local Authority and was contracted out for about 15 years.
I believe many who have been contracted out don't get the full new pension.
Yes I have additional income I am self-employed.

xylophone

Just tried the forecast £159 per week which I believe is the maximum and I am quite pleased about because I worked for a Local Authority and was contracted out for about 15 years.

What exactly does your statement say?

Is a COPE shown?

You expect to draw your deferred LGPS pension at age 65?

Regarding contributions to your stakeholder pension

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

bigadaj

kidmugsy wrote: »

Maybe. It's possible that youngish people currently avoiding 20% income tax by contributing to pensions will face higher rates when they come to withdraw the money.

It's different for OldGranny but if I were young I wouldn't tie money up for decades to get only 20% relief: I'd want an employer contribution, or salary sacrifice, or preferably both.

Many things change as you age, some for the worse and some for the better.