Pension vs ISA

[IR35 Avoider]

ISAs will never be more tax efficient than pensions - don't foget the 25% tax free lump sum from pensions. You have to try very hard to construct an example of someone who won't get a tax advantage from saving via pensions instead of ISAs.

Pensions have more investment flexibility than ISAs, though for most people's purposes there's probably no difference. (Can't think of a single ISA investment that can't be held in pension, can think of pension investments that can't be held in an ISA, e.g. cash, insurance company property funds, with-profits funds, residential property (indirectly), direct commercial property.)

Even if you retire at 50/55 and start spending your pension money then, you don't have to buy an annuity until 75. Given that you have life expectancy of only about 15 years or less by then, that's probably the right option anyway for money that is earmarked for paying your living expenses.

[hyperD]

Gold, munitions, a refinery on an oil well and a bunker. For when the "horn of plenty" collapses.

[NoddY]

In my opinion pensions carry more risk and are obviously far less liquid than an ISA. In reaching this conclusion, I assume that the longer the duration of the investment the greater it would be exposed to 'risks' i.e. changes in government policy etc.

Someone mentioned the issue of control. This is important, because it allows you to alter your investments without forfeit. Try drawing on a pension early and you'll soon learn about forfeit.

The other perspective is to see whether an asset really is an asset - i.e. does it provide an income TODAY, and in general ISA's and other high interest accounts do, albeit a very small one, but compounded over several iterations might provide a more substantial 'genuine' income.

[TheRightStuff]

ISAs will never be more tax efficient than pensions - don't foget the 25% tax free lump sum from pensions. You have to try very hard to construct an example of someone who won't get a tax advantage from saving via pensions instead of ISAs.

Pensions have more investment flexibility than ISAs, though for most people's purposes there's probably no difference. (Can't think of a single ISA investment that can't be held in pension, can think of pension investments that can't be held in an ISA, e.g. cash, insurance company property funds, with-profits funds, residential property (indirectly), direct commercial property.)

Even if you retire at 50/55 and start spending your pension money then, you don't have to buy an annuity until 75. Given that you have life expectancy of only about 15 years or less by then, that's probably the right option anyway for money that is earmarked for paying your living expenses.

so you put money into a pension for 30/40 yrs and end up with a pot of hundreds of 000s of £s. Then on average they only pay out for 15 yrs.

Why not just put that dosh into a high interest ISA and then draw out 25% at 50/55 and then when your 65 simply draw the money out when needed.
If you last more then 30/40 yrs then good luck to you. If you don't then at least the money will pass down to your children.

This is a ver good article http://www.fool.co.uk/school/2005/sch051219.htm

[TheRightStuff]

another reason not to bother with pensions:

http://www.fool.co.uk/news/retiremen...s-swindle.aspx