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.
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.