Pensions - Articles - How over 50s can use pensions to boost returns over ISAs


With a million more people set to be dragged into the higher rate of income tax in the next four years, NFU Mutual are reminding those in their 50s they could be thousands of pounds better off prioritising investment in pensions over ISAs.

 While money can normally be taken from ISAs at any time, flexible pension rules mean investors can access pensions from 55-years-old (57 from 2028) taking the money as lump sums if they wish.

 The impact of pension tax relief means returns could be boosted by up to 41.6%.

 Example:
 Investor with £6,000 to invest
 Higher rate tax payer with earnings of £60,270
 Plans to invest for five years
 Assumes no growth and no charges
 

  

 Sean McCann, Chartered Financial Planner at NFU Mutual, explained: "Many people prioritise ISAs over pensions because it allows them to access funds if they need to.

 "Once you reach 50 and over, the point at which you can take money from your pension draws closer.

 "For those looking to invest for five years or more, the tax relief available can give a significant boost to returns, particularly if you’re going to be in a lower tax band when you take the money out.

 "Latest figures show nearly four million people between 55 and 64 hold ISAs, but many of them could be better off topping up their pension and claiming the tax relief.

 "It’s important to remember that once you take a taxable payment from your pension, your future pension contributions are limited to £4,000 each tax year." 

Back to Index


Similar News to this Story

Wish list for the occupational pensions industry in 2025
As one year closes and another begins, it's an opportune moment to set our sights on the future. The UK occupational pensions industry faces nume
PSIG announces outcome of Consultation
The Pensions Scams Industry Group (PSIG), which was established in 2014 to help protect pension scheme members from scams, today announced the feedbac
Transfer values fell to a 12 month low during November
XPS Group’s Transfer Value Index reached a 12-month low, dropping to £151,000 during November 2024 before then recovering to its previous month-end po

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.