Increasing pension payments vs paying more into an ISA

[itsybitsy]

I'm wondering what to do for the best. If I increase my pension payments my employer doesn't increase theirs so there's no added incentive in that regard, but I'm wondering what's the best option. I appreciate it's probably a 'how long is a piece of string' situation but if anyone's got any thoughts/comments I'd be interested to hear them. I currently have a couple of Vanguard funds within an ISA wrapper - one's a Life Strategy 80% Equity Fund - Accumulation and the other is the US Equity Index Fund - Accumulation. Both quite a high risk level but I'm looking for long term growth so not planning to cash them in any time soon so can weather the current 'bumps' in the road (as long as I don't check them very often ).

[jennyjj01]

As I understand/remember it...
ISA will get Tax free income and capital gain during the holding period, but that's all.
But into your pension fund, it will come out of income before Tax and when you draw it down, 25% will be free of tax.
So from a tax point of view, Pension is the way to go.
But it will be inaccessible till you are 55.

[steptoe]

Its it is a minefield but be careful ok we well took out huge pension pots yup we were earning it so well a finacial advisor was like yer put it in you get this that and will get a mill when you retire and so on , they tell you the good not the bad when the banks took the huge hits , i mean big in one year they took 30k in fee's yup that is right 30k wham gone due to a bad investment .

If you know an accountant or someone who it a good genuine financial advisor would a little chat but again be careful what they put your money in , we took the wifes last year omg what a nightmare nightfield that was , pushed us near the max on what we could have so hence why we spent a huge chunk on more prep kit

Whatever get sound advise i will say the C.A.B are also worth a call they can sometimes put you in touch with good people

[Arzosah]

I'm just wishing I had some wisdom to add. Two thirds of my money is now in cash ISAs, one third in Green/Stewardship medium risk funds. I'm quite a bit older than you, of course, and it's recommended, I think, that as you get nearer to your retirement date, you gradually withdraw from the stock market and stick it in cash instead, in whatever form you can find that's best to you - my cash is a mix of ISAs (and the older fixed rate ones that are almost expiring are at **horrendously** low rates) and premium bonds. I still haven't drawn anything from the pension funds, they're sitting there and slowly accumulating. Hopefully

You're doing well with using Vanguard, for sure, their reputation is very high.

Are you missing any NI contributions that would affect the size of your state pension? That's the only thing to be wary of.

I was just reading through Martin Lewis' page again and I came across this jolly little saying: "Take the age you start your pension and halve it. Then put this % of your pre-tax salary into your pension each year until you retire." He's also got a link to the Money Advice Service's pension calculator, which is a UK government initiative (too late for me and I'm sure you know of it already, but there'll be other people reading this).

[itsybitsy]

In an ideal world I'd be maxing my pension contributions and my ISA allowances every year but we're far from that scenario

No missing NI contributions.

I went with Vanguard as the platform is extremely easy to use and the fees are miniscule. Plus they do have a stellar reputation.

Maybe I'm just panicking a bit about it all, but given where we are in general as a society, I can't see the financial situation getting any better at all, really.

[Arzosah]

In an ideal world I'd be maxing my pension contributions and my ISA allowances every year but we're far from that scenario

Indeed

Maybe I'm just panicking a bit about it all, but given where we are in general as a society, I can't see the financial situation getting any better at all, really.

To be honest, I don't think you're panicking - I think we really are in for the long slow decline that we've talked about on here, because of all the separate issues that are undermining the world as we knew it. If I had my full health and I was still working, I'd be finding a side hustle for sure. If I could manage it, it'd be one unconnected with my main income. For you with your existing side hustle, itsy, could you be a UK distributor for that beautiful yarn producer you linked to on the other thread? That sort of thing.

You also said about pockets of wealth - and absolutely, there are. Even a few years ago, there were people making chili jam and selling it at fairs etc - average price of £2 per 100g, something like that. You can't keep sheep, or llamas or whatever , but you can grow chilis though there's the Elf and Safety Regs then

Where to put your money: I did wonder about company bonds for you? The rates of return usually used to be very good, though I haven't looked at them for a year or so. And it's classed as investment, so your money isn't protected in the same way as personal deposits or isas or what have you.

[jansman]

My own pension lost a LOT of money last year. Looking at all that right now and it ain’t good. You know what? I’ll be better off on the dole ,and that’s a fact. You do your best as a worker and you get turned over…I won’t go on.

[itsybitsy]

I'll have a look at those company bonds - thanks - I'm assuming it's the same thing as corporate bonds?

I do have lots of little bits of crypto too - mainly that I've accumulated for free - but if bitcoin gets to a mill then I'm all set!

[itsybitsy]

My own pension lost a LOT of money last year. Looking at all that right now and it ain’t good. You know what? I’ll be better off on the dole ,and that’s a fact. You do your best as a worker and you get turned over…I won’t go on.

this is why I've always espoused the virtue of the box under the bed, as well as more conventional savings mechanisms.

[jansman]

My own pension lost a LOT of money last year. Looking at all that right now and it ain’t good. You know what? I’ll be better off on the dole ,and that’s a fact. You do your best as a worker and you get turned over…I won’t go on.

this is why I've always espoused the virtue of the box under the bed, as well as more conventional savings mechanisms.

I have just cashed in my ISA to cover Jan if needs it. You obviously get it too.