S&S ISA vs Pension

Audaxer

Puzzled1 wrote: »

As it's 'surplus savings' it's quite possible I will never spend it anyway, so will be passed on. If I get an ISA then I can choose what to do with it. Tied up in the pension it will depend on the type of annuity, and I doubt I'd get back anywhere near what I put in.

Annuities are not the only choice and are not a very popular choice nowadays. Once you reach 55 (or 57 depending on what age you are now) you can opt to keep your money invested in the pension and drawdown regular amounts or lump sums whenever you choose, and 25% of what you take out will be tax free.

FatherAbraham

kidmugsy wrote: »

You really need an awfully good reason not to use salary exchange, such as an expected requirement for the money before age 55-58. Salary exchange = free money; use it while the daft system is still allowed.

Salary exchange is not "daft".

It allows workers in DC schemes to make a similar trade-off to the one allegedly made by members of DB schemes.

atush

I don't try to understand it all, just look at the 'possible pension figure', and so often saw this drop, year after year.

Try and understand it. And i'd ignore the figures you refer to.

Basically, the law changed and made them use much lower figures. So the pension hasnt necessarily been performing badly, but the projected pesnion figures are lower than they once were.

Say what you are invested in.

With a Salary sacrifice pension, i'd be putting most of the extra cash that way. With some put into a S&S isa (if you have a large emergency cash pot).

dunstonh

I don't try to understand it all, just look at the 'possible pension figure', and so often saw this drop, year after year.

That is because these artificial projections saw assumptions that changed each year and became lower and lower. Despite the value going up and up.

I saw someone recently who said much the same and was downbeat on pensions. That was until I told him the real figures he could take. Which were double the projection he was reading (wrongly).

Puzzled1

Prism wrote: »

scottishwidows.co.uk/register/

Though I suggest trying to get advice and read up before making any changes if it lets you.

Thank you. I registered on there just for curiosity, but it does look like I can make changes there if I wanted.

dunstonh wrote: »

Why are you mentioning annuity? You can choose what you want to do with a pension.

Probably because the first site I looked at from some Google search had annuity as the top option when arranging how to 'cash it in'.

atush wrote: »

Say what you are invested in.

I'm not sure if this is what you meant, but it's invested 100% in Scottish Widows Mixed Pension Series 2.

atush wrote: »

With a Salary sacrifice pension, i'd be putting most of the extra cash that way. With some put into a S&S isa (if you have a large emergency cash pot).

Yes, as I read, and hopefully understand more, I am beginning to think my original 'no brainer' comment was indeed correct, so will put most of my thought toward that.

My 'emergency pot' is only quite small, so not (in my opinion) worth the effort of an S&S ISA. Besides which, as an investment there's no guarantee it would actually be there if and when I needed it. I used to keep it in a cash ISA, but recently have moved it to premium bonds. It gives a little entertainment, and I have even been quite lucky (nothing more than £25 lucky) and my bonds have outperformed most cash ISAs.
(edit: just re-reading and I misunderstood your comment. You do say as well as cash.)



Thanks for all the comments. It has made understanding a little easier. I'm even beginning to think it's nothing more than fear of the unknown that makes them look so bewildering.
It does remain something that I don't want to invest too much effort in, so it's quite possible I'll do nothing more than start paying in to the salary exchange scheme. The next opportunity isn't until next March , so plenty of time to read, think and question.

I think all the questions I was thinking of asking so far have been answered on the Scottish Widows site.
I do have another, very small, pension in the hands of the PPF, but I don't think it would be worth doing anything with it, if that's even possible.

Just a couple of questions coming to mind now.
From the very small circle of work colleagues I've mentioned the subject of pensions to, no one has mentioned choosing their own funds (or even wanting to), and as I mentioned before, it's not something I was even aware of. Is just leaving the pension money invested in the existing mixed fund considered 'bad planning'? The company (work) does have some financial advisers who are occasionally available to staff, though I don't know what level of advice they offer. Making any changes to my pension fund could be riskier than just not touching it.

My current thinking, which could change again before the week's out, is to see how the SW fund performs this year, and unless it's significantly worse than the average VLS fund, just leave it alone. What is the best way to compare performance though? I looked at VLS40 on 2 different sites & saw 2 different sets of figures, presumably this will just be the fees that make the difference? I found scottishwidows.co.uk/Extranet/funds/factsheets-prices-performances, but don't know if that's an effective way of comparing yet.