Pensions - Articles - Beware the perils of pension/ISA pitfalls

 "ISAs and pensions are likely to be the first, and often 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. 

 “But the tax treatment of pensions at the moment is far more complicated than ISAs. With a pension you get tax relief upfront. But for a lot of people that’s industry jargon and they don’t know what it means for them in real terms. Or why it matters. Even though, without it, pension pots could be significantly smaller. With longevity, that’s the last thing you need when that pot could be needed for, say 40 years.

 “ISAs investing in cash can be ideal for short to medium term investing, but it’s a different mind-set, motivation and investment strategy for the longer term landscape of pensions. The breadth of investment choice for pensions gives people more options to drive growth and protect them against market movements - and we've seen plenty of those recently.

 “We don’t need to overhaul the system we have; just simplify it. One way to do this might be to have a flat rate of tax relief for all, along with an industry effort to help people understand the benefits of different tax regimes, different investment types and how an adviser can help them make the most of them.”