Faq – Investment and Retirement Planning

retirement planning invest in pension ISA and property

I’m already investing in a pension policy. Should I also start an ISA? Or invest in property?

It is always worth looking at alternative investment strategies.

Arguably, your pension policy is a better investment for the long term, but there are features which may mean that an Individual Savings Account (ISA) has advantages as a parallel savings vehicle.

As you will know, the premiums you pay on your pension policy will usually attract tax relief. Investments in an ISA do not attract tax relief, but once invested your funds are generally in a position comparable to those in your pension policy. Income and gains are, largely, tax free. Read more about savings account rates.

ISA vs Pension Policy

The significant difference is that the ISA rules do not mean that your money is tied up until retirement, and beyond. Instead (subject to plan rules, in some cases) you can withdraw your investment at any time. So, if you are considering an ISA as part of your retirement strategy, you would be able to draw 100% of the accumulated income and capital fund when you retire, not just 25%. And if your circumstances change in the meantime, you will have the comfort of knowing that the ISA fund is available when you need it.

In theory, the tax relief on pension premiums should mean that your funds will grow faster in a pension policy than in an ISA. However, according to the Financial Services Authority, some investors choosing CAT-standard ISAs and who pay tax at the basic rate or less would be no worse off than if they had invested in a pension policy with a company making charges at the average rate for the market.

Also consider other long term investments such as the property market

Property is generally a solid investment when done wisely so consider investing in buy to let properties or larger development projects. South East England has a consistently strong housing market due to increase in population and the high concentration of businesses. If you’re looking for long term wealth management strategies, investing in property developments now can yield great returns once the properties are sold. Explore residential development finance options.

We recommend taking advantage of a few different ways to manage your retirement fund for maximum security and profitability.

Contact us for independent pensions and savings advice