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Pension savers told to consider ISAs

Pension savers told to consider ISAs

Category: Pensions

Updated: 13/04/2010
First Published: 13/04/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
People thinking of putting money away for their retirement have been told to remember to use their ISA allowance as a way of saving for life after work.

According to the latest research from Legal & General, the number of people who say they're saving for a pension has risen significantly in the past year.

Almost one in three people are currently thinking of saving for a pension, up from one in five in 2009.

However, since the start of the new tax year, all savers have been able to put up to £10,200 per year into an ISA, £5,100 of which can be placed into a cash ISA.

While money that is placed into a pension will have to remain there until retirement, any put into an ISA can usually be accessed easily when it is needed.

What is more, as well as taking advantage of the tax free status of an ISA, the money can then be withdrawn and invested into a pension as retirement nears, in order to make the most of the tax relief that the Government pays on pension contributions.

"I can't stress highly enough that the sooner we start saving the better, as your money has longer to enjoy investment growth and with the increase in ISA allowances across all ages from April 6, there are now more opportunities to save for the long term," said Claire Evans, Legal & General unit trusts marketing director.

"Money saved in stocks and shares ISAs can be used to invest in a pension later in life with the continued potential to benefit from generous tax allowances from the Government.

"The tax relief on pension contributions could boost the amount paid in to your pension by 20 per cent for basic rate income tax payers."

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