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Many pension funds have been under fire recently. Retirement savers might be looking for alternatives. An Individual Savings Account (ISA), however, can provide an alternative option. But how do they compare to a traditional pension fund? Is it worth making the switch?
What is an ISA?
Cash ISA- protects your savings from the taxman by acting as a tax-free wrapper. The cash ISA works similarly to a traditional savings account but has additional tax benefits. You can learn more about the ISA at foxgroveassociates.co.uk/individual-clients/savings-investment/lifetime-isa.
Stocks and shares ISA – Instead of letting your money sit idle, you can make use of the tax-free benefits of an ISA and invest your savings in a wide range of investments including funds and stocks.
The right ISA will be right for you. You may need to talk to an independent financial advisor.
ISAs for pension saving
ISAs are a great way to save money on your pension. They also allow for greater flexibility. ISAs allow you to access your cash whenever you need it, provided you adhere to the terms of your ISA. This is even if you are not yet retired.
An ISA protects your money from Capital Gains Tax or UK Income Tax. This means you won't pay tax on any income from such a fund, nor any capital gains.
It is possible to combine traditional pension funds with ISAs to save for retirement. This will allow you to reap the benefits of both.