Which of the major political parties

Wirral_paul

ooermissus wrote:

Wirral_Paul wrote:

Rick Chasey wrote:

Pension is just an investment that gets taxed a little differently.

Its not quite that simple Rick. The biggest advantage is the tax relief you get on the pension contributions. You could save into an ISA and that grows (almost) free of tax in the same way as a pension fund would - but you dont get the tax relief on your savings.

That's not quite right. With pensions the money is tax free going in, but taxed when the money comes out after retirement (apart from the lump sum). So, as Rick pointed out, the difference with an ISA is not necessarily as big as people think.

I can assure you my statement is correct (i'm Manging Director of my own Financial Services company) - and the differences are potentially considerable. Anyone stating an ISA is a valid alternative to pensions really doesnt know what they are talking about to be honest - and could cost anyone listening a huge amount of money in retirement. Dont forget - you get tax relief at your current highest rate of income tax and so get potential growth on those additional funds. Yes you may get taxed in retirement on the income you receive, but this is often at a lower rate (and will be 0% for a decent proportion of a private pension, as the State Pension will not fully utilise your personal allowance)

confused@BR

One of the defining moments of your life, if you live that long, is the discovery of how much of an income all your pension savings gains you. I would surmise, nowhere as much as you expected, or need. It is a stacked deck but you have to play.

Good luck, you will need it.

verylonglegs

Wirral_Paul wrote:

ooermissus wrote:

Wirral_Paul wrote:

Rick Chasey wrote:

Pension is just an investment that gets taxed a little differently.

Its not quite that simple Rick. The biggest advantage is the tax relief you get on the pension contributions. You could save into an ISA and that grows (almost) free of tax in the same way as a pension fund would - but you dont get the tax relief on your savings.

That's not quite right. With pensions the money is tax free going in, but taxed when the money comes out after retirement (apart from the lump sum). So, as Rick pointed out, the difference with an ISA is not necessarily as big as people think.

I can assure you my statement is correct (i'm Manging Director of my own Financial Services company) - and the differences are potentially considerable. Anyone stating an ISA is a valid alternative to pensions really doesnt know what they are talking about to be honest - and could cost anyone listening a huge amount of money in retirement. Dont forget - you get tax relief at your current highest rate of income tax and so get potential growth on those additional funds. Yes you may get taxed in retirement on the income you receive, but this is often at a lower rate (and will be 0% for a decent proportion of a private pension, as the State Pension will not fully utilise your personal allowance)

Hmmn, I'm sure you've the best intentions but assurances from your sector of employment don't really carrying a lot of weight these days In all seriousness though you are stating the rules as things stand and a lot could change in the 30-40yrs until retirement so you'd be a fool in my opinion to invest everything in one particular type of investment.

Wirral_paul

verylonglegs wrote:

Hmmn, I'm sure you've the best intentions but assurances from your sector of employment don't really carrying a lot of weight these days In all seriousness though you are stating the rules as things stand and a lot could change in the 30-40yrs until retirement so you'd be a fool in my opinion to invest everything in one particular type of investment.

Who mentioned putting everything into one particular type of investment? I take it you dont take Financial Advice from an Adviser then - instead preferring the advice of internet forums? You are aware that most of the cowboys that used to pass as Finacial Advisers have been pushed out by much higher standards imposed - although I get the feeling that you're actually referring to the banking industry?

Simple fact of it is that tax relief when added to an investment each year for 30 or 40 years can make a massive difference to the pension pot over putting the same net income into say an ISA. Both investments and pensions have their place - depending on the intented use. An ISA would really not be considered as the right advice when saving for retirement however.

ballysmate

Do the new workplace pensions not mean that your employer also pays into your pension? So I'm guessing that this fact alone, regardless of an individual's tax position would make it a better option than paying into an ISA, as someone earlier suggested.

Wirral_paul

Ballysmate wrote:

Do the new workplace pensions not mean that your employer also pays into your pension? So I'm guessing that this fact alone, regardless of an individual's tax position would make it a better option than paying into an ISA, as someone earlier suggested.

The workplace pension rules mean your employer generally pays into a pension scheme for you in addition to your own contributions. You can opt out - but would lose the employer's contributions. Even if a nil rate tax payer - you'd get 20% tax relief added to your savings (up to £3600 per annum)