Top up your pension...

[SimonMac]

You're a little thick aren't you. That's why you'll always be a low level jobbing contractor.

And you will always be a Walter Mitty-esque fantasist!

[expat]

I think I covered that in my question.

a)your company puts 10k in to a pension each year
b)your company pays out 10k (after you already reached your personal allowance) and you put what is left after personal tax into an ISA.

Clearly less goes into the ISA each year but then in 30 yearys it is tax-free to take it out... so what is a proper calculation, taking into account company tax liability, personal tax, tax relief, etc, etc.

You don't need to do such a detailed calculation IMHO, first look at the big points and see if the answer is clear from them:
1. Inflation can be ignored because it is the same for both options.
2. Rate of return on investment can be ignored for the comparison, if you assume that it is the same for both.
3. A pension allows you to take out 25% tax-free; there is no corresponding advantage for an ISA.
4. Many people are in HRT during the working/saving part of their life but expect to be in BRT after retirement; if this applies to you it is an advantage for a pension, if not then the 2 options are equal in this respect.
5. At the end of the day the main advantage of not putting it into a pension is the ability to spend the money right away. If you aim to save it at least until retirement, and to spend it no faster than over at least 7 years, the pension is better on all financial counts. How much better depends on how big the factors 3 and 4 are compared to what you expect to make in interest or other gains.
Against the financial advantage of the pension there is no financial advantage to the income/ISA route in the long run, merely a psychological one. Your psychology, your choice.

[I just need to test it]

Every time someone posts I end up changing my mind over what to do. Could you lot please cut it out.

[d000hg]

Every time someone posts I end up changing my mind over what to do. Could you lot please cut it out.

Just split it and cover all your bases.

[I just need to test it]

Yeah. I'm playing catchup after divorce so I'm never going to scale the heights I might have done. At 50 years of age I'm frantically lobbing money from the company into a pension, I've got about £150K equity in a rental property, a trivial bit of cash and a laughably small stock portfolio (How ARE woolworths doing, by the way?).

All that can save me is my wonderful second wife. If she kicks me out it's Game Over.

[Lightwave]

You don't need to do such a detailed calculation IMHO, first look at the big points and see if the answer is clear from them:
1. Inflation can be ignored because it is the same for both options.
2. Rate of return on investment can be ignored for the comparison, if you assume that it is the same for both.
3. A pension allows you to take out 25% tax-free; there is no corresponding advantage for an ISA.
4. Many people are in HRT during the working/saving part of their life but expect to be in BRT after retirement; if this applies to you it is an advantage for a pension, if not then the 2 options are equal in this respect.
5. At the end of the day the main advantage of not putting it into a pension is the ability to spend the money right away. If you aim to save it at least until retirement, and to spend it no faster than over at least 7 years, the pension is better on all financial counts. How much better depends on how big the factors 3 and 4 are compared to what you expect to make in interest or other gains.
Against the financial advantage of the pension there is no financial advantage to the income/ISA route in the long run, merely a psychological one. Your psychology, your choice.

A pension is trapped until you are 55 and subject to rules which might change between now and then.
An ISA can be accessed at any time.
Because of this, I put money into my ISA, as I wanted to be free to change direction before 55, perhaps to buy a business or invest in one.
Or to pay off the mortgage, be unemployed for a bit, buy a yacht...
As I get nearer to retirement, tying up money in a pension does not seem so bad.

If I'm not in the 40% tax bracket, the ISA comes first.
In my case I think that approach has enabled me to make more, because if my savings were all tied up in a pension, I'd have struggled to have the current house.

There is a lot of psychology in it, but there is a cash value in having control of your dosh, sometimes.

[SimonMac]

A pension is trapped until you are 55 and subject to rules which might change between now and then.

They already are, from 2028 the lower age will be 57

[Lightwave]

They already are, from 2028 the lower age will be 57

I will be more than 57 by then.
I might be wrong, but wasn't the lower limit 50 when I started my first personal pension in 1989 or so?

[Basil Fawlty]

A pension is trapped until you are 55 and subject to rules which might change between now and then.
An ISA can be accessed at any time.
Because of this, I put money into my ISA, as I wanted to be free to change direction before 55, perhaps to buy a business or invest in one.
Or to pay off the mortgage, be unemployed for a bit, buy a yacht...
As I get nearer to retirement, tying up money in a pension does not seem so bad.

If I'm not in the 40% tax bracket, the ISA comes first.
In my case I think that approach has enabled me to make more, because if my savings were all tied up in a pension, I'd have struggled to have the current house.

There is a lot of psychology in it, but there is a cash value in having control of your dosh, sometimes.

Another consideration with regards to ISAs is once your money is in the ISA then there'll be no more tax to pay on any income you make from it. Assuming you bought an annuity with a pension pot and start receiving income from it then that income is subject to taxation. How much of an advantage/disadvantage this would be would depend upon how long you eventually live for and the size of the pot.

Also what would happen it you were to die within a few years of buying the annuity ? Presumably it's gone, whereas at least with ISAs the money would still form part of your estate.

[d000hg]

That's why I think the performance of your investment IS relevant to the sums. The better your shares perform, the more tax you pay in a pension scenario. So ironically if you make a killing, an ISA could work out better... though you'd probably be happy anyway if that happened!