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Pensions and Isas can work together for you

We are getting to that time of year when Enable’s IFAs in Bishops Stortford like to make sure you know where you are with your Isas.  Putting money into and Isa does not mean you should not put money into a pension and visa versa.  It is important to remember that both pensions and Isas are tax-efficient ways of saving your money so it makes sense to combine the best elements of both of them, in co-ordination with your personal financial goals.

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For long-term savings a combination of pensions and Isas is the way pensions provide the initial tax relief, which gives your savings an immediate uplift, whereas Isas can still be tax efficient but you are still able to access your money whenever you like.  Sean McCann of NFU Mutual. “Pensions and Isas work hand in hand as vital parts of many portfolios. Understanding what you want the money for, and when you may need it, is critical to making the best choice.” It is important to still remember that when you hold investments in either of these wrappers they will still present the same risks. You can lose money as well as gain money.

If you are a higher or additional rate income taxpayer, and are prepared to invest over the long term, then it could be beneficial for you to hold more of your money in pensions. However, if you’re a basic rate taxpayer and  might need to access your money, perhaps for a shorter-term goal, then you should put more focus on Isas – cash Isas in this case as investment Isas are really only appropriate for longer-term purposes.

“The downside of a pension is that you can’t access your money until you reach the current age limit of 55, which isn’t helpful if you need to get your hands on it in the meantime,” says Chase de Vere’s Patrick Connolly. “However, the flip side to the easy accessibility of Isas is that people might fritter away their savings and have nothing left when they need it, for example. This is why a combination of pensions and Isas is usually the best approach.” Enable’s IFA’s can help you set up both to work for you.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 – Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.

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