Taking pensions out and putting into an isa

Liz65

Hi, with the current state of finances in the would affecting pensions would it be sensible to take out a pension whilst it is still at a good value and start paying it into an isa instead?  

Silvertabby

How old are you?

BridgetTheCat

What type of pension and what type of ISA?

Albermarle

Although there has been some instability in financial markets, it is not as bad as many times in the past, so the usual advice is do not panic and keep sticking it out long term.
Unless you have a need for the money in the next couple of years.

MallyGirl

You could move the pension investments into something more 'cash like' if you were referring to a cash ISA. 

You cannot remove money from a pension until you are 55 (soon to rise).
You would pay tax on 75% of the drawdown.
If you took a single penny of taxable income (unless under the small pot rule) then your future contributions to pensions will be restricted.
ISA contributions are limited to £20k per year (per person)

This is very unlikely to be the right course of action

Brie

And what type of pension?  Assuming it's a DC pension and you would be moving into an investment ISA I can't see that you will gain anything.  

Marcon

MallyGirl said:

You could move the pension investments into something more 'cash like' if you were referring to a cash ISA. 

You cannot remove money from a pension until you are 55 (soon to rise).
You would pay tax on 75% of the drawdown.
If you took a single penny of taxable income (unless under the small pot rule) then your future contributions to pensions will be restricted.
ISA contributions are limited to £20k per year (per person)

This is very unlikely to be the right course of action

Just to clarify...

If you 'flexibly access' a single penny of taxable income from a defined contribution scheme (unless under the small pot rule) then your future contributions to pensions will be restricted. Taking funds from a defined benefit scheme, or using your DC pot to buy a lifetime annuity, will not trigger any such restriction.

SVaz

It’s only likely to be a good idea if you can get your pension out tax free (or perhaps at 20% tax if you are likely to become a higher rate tax payer once you get State pension) .
Otherwise it make no sense at all, given that you can keep cash or a short term money market fund inside your pension -  plus once you take a penny of taxable income, you are limited to £10k contributions.

dunstonh

Liz65 said:

Hi, with the current state of finances in the would affecting pensions would it be sensible to take out a pension whilst it is still at a good value and start paying it into an isa instead?  

No. It would be barmy to react to short term issues by paying tax unnecessarily.

It's not as if this recent fall has been that large.   Of all the crashes over the last 25 years (loss periods in excess of 20%) this is the mildest.    You have been through far worse.

jimjames

Liz65 said:

Hi, with the current state of finances in the would affecting pensions would it be sensible to take out a pension whilst it is still at a good value and start paying it into an isa instead?  

If you're paying into the pension then you're buying units at a better price than 2 weeks ago so that's a good thing