Should I pay into an ISA instead of a Personal Pension?

Give that ISAs offer tax-free savings, am I not better investing my money into one of these rather than a pension?

Question asked by Glen Donaldson
Need Pension Advice?
Call us on 02084327333
First Name
Phone
Email

Answered by Andrew Jenkinson

Individual savings accounts (ISAs) are a great way to save as returns are tax-free, and you can put your money into a huge range of different investments. The other big advantage is that you can cash them in at any point, whereas you can’t access your pension until you reach the age of 55.

In the 2017/18 tax year, you can save up to £20,000 into ISAs, either investing in cash or stocks and shares, or a combination of the two. Returns are free from both income tax and capital gains tax.

ISAs and Tax Relief

However, unlike pensions, any money you pay into an ISA won’t benefit from tax relief (i.e pension contributions are paid from gross income whereas moneys paid into an ISA are paid from net income). Also, your employer won’t make contributions on your behalf.

To see how valuable pension tax relief can be for you, use our Pension Tax Relief Calculator →

Usually it’s a good idea to save into both pensions and ISAs when thinking about how you will fund your retirement. If in doubt, seek professional financial advice about which investments are likely to suit your requirements.

isa or pension
 
tax relief
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Start your journey today...
  Find out how a Drewberry financial adviser can help you reach your destination by making the most of your finances.
Call us on 

Frequently Asked Pensions Advice Questions

 
I took time out of work to be a full-time mum. I’m back to work now my children are older, but...
 
Is there a tax allowance for personal pensions like with gross income? How much am I allowed to contribute...
 
I’ve been made redundant and don’t have any unemployment insurance so I wanted to know if...
 
I’m just about to retire and can take my pension now so I need to try and work out what to do with...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Kevin Paul
05/09/2017

Excellent service renewing our medical insurance, professional advice, good rates found and excellent professional after service, highly recommended.

Max Edgar
09/09/2017

Nadeem was brilliant. He was very patient and worked very well with me to come up with the best solution possible for my budget. Perfect solution. Thank you very much.

Aidan Smyth
11/09/2017

Dealt with me promptly and provided me with the most cost-effective option consistent with my requirements. Very pleased and thank you.

We are rated 4.9/5 based on 1129 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.93 / 5 Average
1,222 Reviews
A
Overall Rating
Really, really helpful! Stopped me from signing up with an unhelpful company, and did basically all of the legwork for me in signing up with the right one. I can't have been the most helpful client as I'm 19 and only just started looking into it last week, but he took all the questions in stride! Put up with me turning to ask my dad questions every 2 minutes as well. I was helped by 2 workers; Sam and Nick. Thank you very much to both!
L Finch
Overall Rating
Good communication and follow ups. Friendly. A thorough research for my insurance needs.
M
Overall Rating

Sam Barr-Worsfold was very helpful and provided excellent customer service. Sam discovered I was paying too much premium for my current cover. Sam recommended and helped moved to a new cover with lower premium that provided the level of cover (terms required stated in the provider's policy) I wanted. I recommend highly recommend Sam and Drewberry Insurance. Thank you Sam.
Anonymous
Overall Rating
Thorough, knowledgeable and great communication
Anonymous
Overall Rating
Went through each policy in detail and made sure I was getting the correct one for me