Savings or Pension?

dunstonh

.Give it a go and see what happens, controlling your own money is your choice not someone else who is planning their next holiday to the West Indies on your money!

Your post has so much incorrect information that I started to correct your mistakes or bad assumptions that it was getting so long that I decided to delete my reply and and just say you are making bad mistakes on poor assumptions and you are making yourself financially worse off.   Ironically, the charges on savings are typically higher than on investments.  Its just that one is implicit and the other explicit.  

For someone who claims to be self employed, you have a poor understanding of distribution and supply chains.   

You have chosen options that will place you in a worse financial position.  So, you are in no position to recommend such bad moves to others on a public forum.    

boingy

It's a bit of a thread necro and their first post so they may well be a bot.

jimjames

boingy said:

It's a bit of a thread necro and their first post so they may well be a bot.

Indeed and also shows how much has changed since Oct!

Bostonerimus1 said:

mark13 said:

I don't think you are always better of in a pension. ISA"s are tax free.  When you withdraw money from your pension (other than the tax free lump sum) it is taxed as part of your income  As an example you could keep around £10k as an emergency fund. . The balance I would move to a stocks and  shares ISA. Any new money from earnings I would feed into the pension.  How has your pension performed over the last few years ?  Do yo know where it is invested?

It really depends on the tax you pay when working compared to when you are retired. Also you do get 25% of your pension tax free and they are not included in your estate for IHT calculations so that might be a big advantage to your beneficiaries.

eskbanker

Greb46 said:

[I signed up with an expensive financial advisor and somehow believe that this supports an illogical conclusion that cash savings are fundamentally a better bet than investing via a pension]

Just thought I'd paraphrase your post for anyone not minded to plough through it all....

artyboy

jimjames said:

boingy said:

It's a bit of a thread necro and their first post so they may well be a bot.

Indeed and also shows how much has changed since Oct!

Bostonerimus1 said:

mark13 said:

I don't think you are always better of in a pension. ISA"s are tax free.  When you withdraw money from your pension (other than the tax free lump sum) it is taxed as part of your income  As an example you could keep around £10k as an emergency fund. . The balance I would move to a stocks and  shares ISA. Any new money from earnings I would feed into the pension.  How has your pension performed over the last few years ?  Do yo know where it is invested?

It really depends on the tax you pay when working compared to when you are retired. Also you do get 25% of your pension tax free and they are not included in your estate for IHT calculations so that might be a big advantage to your beneficiaries.

And definitely not changed for the better! 

onomatopoeia99

artyboy said:

jimjames said:

boingy said:

It's a bit of a thread necro and their first post so they may well be a bot.

Indeed and also shows how much has changed since Oct!

Bostonerimus1 said:

mark13 said:

I don't think you are always better of in a pension. ISA"s are tax free.  When you withdraw money from your pension (other than the tax free lump sum) it is taxed as part of your income  As an example you could keep around £10k as an emergency fund. . The balance I would move to a stocks and  shares ISA. Any new money from earnings I would feed into the pension.  How has your pension performed over the last few years ?  Do yo know where it is invested?

It really depends on the tax you pay when working compared to when you are retired. Also you do get 25% of your pension tax free and they are not included in your estate for IHT calculations so that might be a big advantage to your beneficiaries.

And definitely not changed for the better! 

I'd say very much for the better, was always absurd that inheriting a SIPP from an under 75 resulted in unencumbered cash.  Double bad as people then started using them for IHT planning rather than retirement savings.

I'll be lucky to make it to 75 and am entirely content that the nominees for my pensions will have to pay tax on their inheritance  (as will my other beneficiaries, since my house is worth more than the £325k ceiling).  They are getting free money after all.

VNX

Greb46 said:

To be honest I have a pension which I've had for years I'm paying into it about £100 a month .All the financial advisors say you must pay into a pension (mine is a private one being self employed).The reason being is one financial advisor was a customer and I noticed all the new cars holidays etc he was regularly going on.Mainly due to the charges for having a pension which was held with a national company.The charges end up so high hence the customers good lifestyle while I'm having to graft continuously.Basically I'm paying for his lifestyle and noticed the interest rate after the charges was pathetic about 1%.
I still hold the pension though as he keeps saying I need to pay more into it not surprisingly as it will make him more money so I stopped increasing it a few years ago.Like anything does anyone working in anything really want to help someone else,no.Hence the financial advisors pushing pension schemes.
I thought look into savings myself so without any knowledge I searched on this site and a few others and found Cash ISAs where you are allowed to invest £20k a year tax free currently about 5% .Any other savings I search for the best easy access savings meaning you can withdraw the money immediately if you need it or if you don't generally a fixed savings account for a year will pay a higher interest if you don't have to withdraw it in that time .The non ISA accounts you have to pay tax on but if it's 4 or 5% it still works out a lot better than the 1% the financial advisors say you must invest in.Ive noticed my finances increase dramatically without the pension which I can't get hold of until 55 anyway and then you're still paying high tax on it.Give it a go and see what happens, controlling your own money is your choice not someone else who is planning their next holiday to the West Indies on your money!

You don’t earn an interest rate on a pension 

Albermarle

onomatopoeia99 said:

artyboy said:

jimjames said:

boingy said:

It's a bit of a thread necro and their first post so they may well be a bot.

Indeed and also shows how much has changed since Oct!

Bostonerimus1 said:

mark13 said:

I don't think you are always better of in a pension. ISA"s are tax free.  When you withdraw money from your pension (other than the tax free lump sum) it is taxed as part of your income  As an example you could keep around £10k as an emergency fund. . The balance I would move to a stocks and  shares ISA. Any new money from earnings I would feed into the pension.  How has your pension performed over the last few years ?  Do yo know where it is invested?

It really depends on the tax you pay when working compared to when you are retired. Also you do get 25% of your pension tax free and they are not included in your estate for IHT calculations so that might be a big advantage to your beneficiaries.

And definitely not changed for the better! 

I'd say very much for the better, was always absurd that inheriting a SIPP from an under 75 resulted in unencumbered cash.  Double bad as people then started using them for IHT planning rather than retirement savings.

I'll be lucky to make it to 75 and am entirely content that the nominees for my pensions will have to pay tax on their inheritance  (as will my other beneficiaries, since my house is worth more than the £325k ceiling).  They are getting free money after all.

The rule change announced in the budget was about unused pension pots being counted in the deceased persons estate for IHT calculation purposes.

AFAIK - the rule about beneficiaries being able to withdraw from the pot they receive tax free, if the deceased was under 75 has not changed ( somewhat surprisingly) unless I have missed something, which is entirely possible. 

winkowinko

Hello, OP here again. Don't worry, I have completely disregarded the post made by @Greb46 a few days ago.

Back to my original post/goal, I think I have found a bit of a strategy for what I would like to do. As someone who is very familiar with cash ISA's, but a total newbie to S&S ISAS and SIPP's I thought I would run it past you guys here to see if my plan makes sense.

I have a fixed cash ISA that is due to mature in August this year (total £78k). I intend to transfer this to the S&S ISA Vanguard FTSE all cap index fund. I assume this will be relatively straightforward but have never transferred from cash ISA to S&S ISA. 

Over the next few years, I plan to gradually drip-feed some of those funds from the S&S ISA into a SIPP (still investing in the same FTSE all cap fund, but open to suggestions). I understand that I can't transfer from ISA to SIPP directly, and would need to withdraw/ then deposit.

I am still undecided about how much of the S&S ISA I will move to the SIPP before retirement. Logic tells me to eventually move all/most of it, because of the tax relief bonus it will receive. Would that be sensible, or would I be better off holding some back in the ISA?

In addition to this maturing ISA, I still have an emergency fund of around £20k which I was planning to put into a cash ISA in April. I guess it makes sense to spread my money around a bit and retain some of it as cash?

Just to recap my personal situation - aged 45. My partner and I have a mortgage, although only she contributes to it as I put down 50% deposit when we bought the house. So essentially my 50% is paid for, although it's probably wise for me to hold some cash back in case she has trouble paying the mortgage at some point - still 23 years to run on it.
I currently work part-time and earn around £27k. I have a workplace pension (NEST) where I contribute 8%, and my employer contributes the minimum 3%. They will (currently) not budge on this figure.

Is my plan making general sense, or are there any glaring errors in it?

Aretnap

dunstonh said:

.Give it a go and see what happens, controlling your own money is your choice not someone else who is planning their next holiday to the West Indies on your money!

Ironically, the charges on savings are typically higher than on investments.  Its just that one is implicit and the other explicit.  

Have to say, I did rather like the unspoken assumption that if you put your cash in a bank, nobody is buying fast cars or going on expensive foreign holidays on the back of your savings.

Bankers are, after all, a notoriously underpaid, impoverished and frugal class of people