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Pension or ISA
Comments
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True to a point, but you dont invest in cash long term & also the reduction wont affect that many people as vast majority cant afford to save that amount anyway. The change also doesnt impact on whats already invested, whereas as pension tax change would
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when we hit pension access age we tilted everything towards the pension. worst case if we needed access we could. Just didn’t want to ignore 42% tax relief.
Although right now as a household we’re over 50% saving rate and I might slow down a tiny bit. Car finance ending soon and daughter about 12 months off finishing uni so that should free up 10k a year gross which I’d assumed would get piled on. but with prices going up and we’re already running a fairly tight ship on day to day budget, I might hold onto that for a while - either it’ll be used for increased costs or can go into an ISA as the first couple of years income gap (the simplicity of access wins over 6% tax relief benefit - we’ll be down in basic rate by then)
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It's not just cash, though. The government is suggesting it will include a range of low-risk investments as well. They have yet to publish what those will be, but the general feeling is it could be short-term bonds and gilts as well as money markets. It could include any bonds and gilts irrespective of term.
Lots of people moved their defensive side of the portfolio to short-term options in recent years as gilts and bonds have being more volatile than historically and have provided very little upside.
Plus with Stocks and Shares ISAs the changes will affect everyone who's already invested unless they're over 65
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Agreed. I also believe HMG fiddling with pensions - especially with regard to the higher rate tax relief - is not too far distant. Make the most of it whilst you can.
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Just under three years to quitting FT work. Tilted towards SS ISA but pension is still setup to harvest max employer contribution and keep within BRT. The pension has the first couple of years drawdown in STMMF. Not that much as supplementing DB. Also plan on keeping on the PT job which currently is 100% pensioned. As said above our savings rate is over 50% of net income too. God I can’t wait to reap all these years of saving hard, lol!
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Yeah, but theyre very cash like so my point still stands. They were the suggested loopholes for those wanting to keep putting £20k into cash. There is however the likes of loanpad, which theyve said IFISAs will keep the full £20k limit
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Higher rate tax relief being removed has been part of the speculation about pensions for many years, but has never happened. Perhaps a bit surprisingly considering other changes that have come in, and how expensive for the Treasury it is.
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….and as we all know, past performance is no guarantee of future results…
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