Pensions - Articles - AXA Wealth, questions if cash is what you really want

 "Addressing this tendency for last minute thinking was no doubt one of the reasons behind the government's Green Paper to incentivise saving. 

 "ISAs and pensions are likely to be the first, if not only, saving and investment products most people in the UK have. Both have their place in a financial plan and their different features make them suitable for different people at different times.

 "When it comes to thinking about where and how to invest, most people will start with a cash ISA. Over 75 per cent (or £61bn) of ISA savings in the UK are in cash ISAs*. A high profile ISA ‘season’, availability from high street banks and even advertising with sports stars and celebrities has done a great deal to increase the awareness and popularity of cash ISAs.

 "But for medium to longer term, investing in cash isn't necessarily best, even if it is popular. While stocks and shares ISAs allow for people to invest for medium term, five to 10 years for example, pensions can come into their own for long term planning. The breadth of investment choice for pensions compared to cash ISAs gives people the opportunity to have a diversified investment strategy to drive growth and protect them against market movements - and we've seen plenty of those recently. But it doesn’t stop there, the tax reliefs at the beginning are also critical to helping people build up a bigger pension pot and incentivise them to think longer term.

 "Moves to simplify pensions by making them more like ISAs could alter the types of investments people should be thinking about for the longer term – with a risk that people will not diversify their investment choice. That's not to say that pensions shouldn't be simpler to understand. They definitely should. And more should be done to help people understand the benefits of different investment types and how an adviser can help them make the most of it. But from an investment perspective are ISA-like pensions such a good idea? I don't think so."