What are the benefits of moving my ISA into my pension?

25 March 2021

Question by Andrew

Hi. I am 50 and have a couple of stocks & shares ISA's. One has about £27k in it. I have some pension savings but with plenty of room for more. Would it be beneficial to move my ISA into my pension? In doing so would I benefit from tax relief etc and would I be able to draw down from it if needed once I am over 55?. Thanks Andrew


Answered by Boring Money

Andrew

Good thinking! The merits of doing this are of course increased if you are a higher rate taxpayer too. This said, fundamentally I would prefer not to do this. ISA’s have the great advantage of being accessible at any time. Once the money is in your pension it is locked in there until you are 55. And thereafter you can only access a quarter of the fund with the rest being taxable.

So a lot of this is based on your tax position now and also what it might be in retirement. By default, I would be inclined to leave the funds where they are for now, though it may be worth returning to this a few years before your retirement and considering again, depending on your then circumstances.

Answered by

Boring Money