Which is better for me an ISA or a Pension?
28 July 2021
Question by Sarah
I have a lump sum of money. Is it better to put it into an ISA or into a pension? I am 47 years old
Answered by James Mallinson
Without knowing how much money you have, or what you want to it to do for you it’s very difficult to say either way. Both ISAs and Pensions can be very useful vehicles for savings, however Pensions can only be accessed after the age of 55 (currently, - set to rise to 57), so if you want to use the money before then you’ll have to use an ISA. If you have more than £20,000 then you’ll have more than your available ISA allowance for this year and may have to use different tax wrappers to invest your money. Most modern ISAs and Pensions give you access to the same underlying investments, so choice of what you invest in should be the same across both. The main difference will be the tax treatment on contributions, growth and then accessing the money in the future. I’d recommend you speak to an independent financial adviser who’ll be able to ask you some helpful questions and then help you with your choice.