Invest vs Pension

simonhi99

My wife and I are both in our mid 50's and looking at options. My wife has approx  £50k earning literally pennies whilst sat in an ISA. She doesn't work due to disability and doesn't have a pension.
I am looking to retire in the next 5-10 years and the ISA clearly isn't going to earn us much, so I see 3 options...
1. Move all the money into my pension, obviously not all in one go due to the limits.
2. Invest the money elsewhere.
or
3. A mixture of the two.

Thoughts, suggestions please.

TIA,
Simon

Ciprico

Does your employer offer salary sacrifice pension contributions. Maxing that could be the best initial thing to exploit even if it means spending isa to cover salary shortfall...

barnstar2077

You say your wife has x amount of money, but then you say it could go in your pension.  Couldn't she open a pension herself to put her money in?

simonhi99

123mat123 said:

Does your employer offer salary sacrifice pension contributions. Maxing that could be the best initial thing to exploit even if it means spending isa to cover salary shortfall...

I hadn't thought of that, makes sense, thank you.

simonhi99

barnstar2077 said:

You say your wife has x amount of money, but then you say it could go in your pension.  Couldn't she open a pension herself to put her money in?

It was a thought, but then that's another lot of  fees etc to be paid.

dunstonh

Invest vs Pension

That is a bit like asking car or petrol.
Pensions are a tax wrapper that you place your investments in.  ISAs are a tax wrapper you place your investments in.

1. Move all the money into my pension, obviously not all in one go due to the limits.
2. Invest the money elsewhere.
or
3. A mixture of the two.

All three of those could be suitable.  We dont have enough to go on to say which.

It was a thought, but then that's another lot of  fees etc to be paid.

It doesnt matter if you have one pension or ten pensions.   charges are typically based on the amount invested.  i..e 10 plans charging 0.5% p.a. has the same total charge as one plan charging 0.5% p.a.

Notepad_Phil

simonhi99 said:

barnstar2077 said:

You say your wife has x amount of money, but then you say it could go in your pension.  Couldn't she open a pension herself to put her money in?

It was a thought, but then that's another lot of  fees etc to be paid.

She has her own personal allowance, so putting £2880 into a pension (which will be raised to £3600 by the government) is likely to generate a lot more than the fees you'll have to pay. i.e. she may be able to get all of the extra £720 out without having to pay any tax on it.

Have you checked both state pension situations - it may be that a good use for some of the money will be to pay voluntary national insurance.

Bravepants

Also, if you pay your wife's money into YOUR pension and then YOU die, what happens to HER money?

NottinghamKnight

Bravepants said:

Also, if you pay your wife's money into YOUR pension and then YOU die, what happens to HER money?

She would presumably be on the nomination form one would expect. 

Aretnap

simonhi99 said:

barnstar2077 said:

You say your wife has x amount of money, but then you say it could go in your pension.  Couldn't she open a pension herself to put her money in?

It was a thought, but then that's another lot of  fees etc to be paid.

Not necessarily; the fee structure will depend on the platform but will often be a straight percentage of the amount invested, making the fees exactly the same whether the money is split across one pension or two.

And there can be significant tax advantages to splitting it across two pensions when you come to withdraw; you potentially have two personal allowances worth of tax free withdrawals per year rather than one, for example.

If your wife has no income then her annual contribution will be limited to (from memory) £2880, which will be topped up to £3600 with tax relief; she would then be able to withdraw this tax free (immediately if she is over 55) making it just about the best investment it is possible to make with £2880, short of buying a money printing machine. 

Albermarle

Invest vs Pension
Better to think about it as - Invest within a pension or invest outside a pension.
Normally pension is better due to the tax benefits , especially if you can contribute via salary sacrifice.
Also whichever way you do it you need to think about the actual investments themselves . Are you aware of what your pension is invested in ?