ISAs can be used to save for anything – including retirement, so they're useful alongside a pension. There are limits to how much you can pay in each year though and the tax benefits work in different ways from pensions. So, pension or ISA?
- Allow short or longer-term saving
- Can be used for anything – including retirement savings
- No tax relief on money paid in
- No tax on growth or when you withdraw money.
Please note, the value of an investment can fall as well as rise and isn’t guaranteed. You could get back less than you originally invested.
The tax treatment depends on the individual circumstances of each client and may be subject to change in future.
There are two types of ISA:
- A savings account that earns tax-free interest
- Typically less risky but their growth potential is linked to interest rates.
Stocks and Shares ISA
- No tax on any dividends received
- Profits exempt from capital gains tax
- Invest on stock market and have greater growth potential
- Come with risk of losing money if markets fall.
Both kinds have a pay-in limit each tax year. Find out the limits at HMRC(Opens new window).
Retiready from Aegon
Find our more about taking control of your pension and ISA with Retiready.