Save into an ISA or small pension pot?

mrsmiggins1

THANK YOU EVERYONE! 

I'm close to retiring (age 64) and would like to invest some savings before the end of the financial year. Would it be better to invest in an ISA or put it into one of my small pension pots?

Robin9

Does your employer contribute ?

By close to retiring I assume you mean 67 ?

tacpot12

Putting it into your pension would give you the tax relief on what you contribute, but if you are likely to need cash as soon as you retire, e.g. you don't have much by way of cash savings already, you might want to keep it as cash for when you need it. The decision might depend on whether you can keep cash in one of your small pensions. If you can, then paying into the pension for the tax relief would be better. 

mrsmiggins1

Robin9 said:

Does your employer contribute ?

By close to retiring I assume you mean 67 ?

Thanks Robin9 - 66 1/2 when I get State Pension, two years time. 

Robin9

Have you a State Pension Forecast ? You mat do better filling in any gaps?

mrsmiggins1

PS I recently took voluntary redundancy, so I mean a small pension pot from a previous job (not my last one). 

mrsmiggins1

I've no gaps in my NI contributions, so expect full State Pension?

xylophone

I've no gaps in my NI contributions, so expect full State Pension?

Check your situation here

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

Veteransaver

If you are a 40% tax payer or higher it would make sense to put it in pension, assuming you won't be a 40% tax payer in retirement.
Salary sacrifice in your work scheme if you have one would also make sense
If only a 20% taxpayer then it isn't quite as beneficial to put in pension, though you will still benefit from taking 25% tax free, effectively giving you a 15% tax rate rather than 20%.
Obviously you need to keep an eye on immediate cash needs, but by paying some into pension now there's no real reason why you can't pay it in and then start drawing it down virtually straight away anyway.

RipleyG

Don't forget to check what the fees will be on the pension. With only a few years to go, you might find the fees reduce/wipe out any growth in value and a fixed rate cash ISA with no fees might be a better bet. 

wjr4

RipleyG said:

Don't forget to check what the fees will be on the pension. With only a few years to go, you might find the fees reduce/wipe out any growth in value and a fixed rate cash ISA with no fees might be a better bet. 

Fees are usually a percentage so this state is incorrect.