UK Personal Pensions Dominate Isas for Retirement Saving
More than 51% of people would save into a UK Personal Pension to accumulate savings for their retirement, making this the most popular retirement product, according to the latest poll.
The poll asked financial advisers which savings vehicle clients were most likely to use to accumulate savings for retirement.
UK Personal Pensions were the most popular as people commonly used this product to save for retirement.
30% of advisers said their clients used company pension plans, while 19% said they would use a stocks and shares Isa for their clients’ retirement savings.
None of the advisers who voted in the poll, said their clients would use a cash Isa to accumulate retirement savings.
Automatic enrolment and the benefits of an employer contribution plus pension tax relief make workplace pension saving very attractive, but some individuals will be looking for other ways to invest if they are self-employed or have hit their tax relief limits.
A company pension plan is the first port of call for retirement savings because it comes with valuable employer contributions as well as tax relief. However, advisory clients are probably more likely than the population at large to use personal pensions as well because they have maximised on their employer contributions.
Companies will often set up a cheap and cheerful scheme to comply with auto-enrolment rules but many employees will then pay in lump sums to a private scheme alongside this. This gives a greater degree of personal control, primarily around fund choice.
However, the best retirement planning strategies would make good use of both Isas and pension rules.
UK Pensions offer fantastic tax breaks, particularly for higher and additional rate tax payers but people need accessibility too. Not everyone, particularly those who are early in their financial journey, can afford to tie up vast amounts of money in UK pensions and therefore Isas will be more appealing.