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Pensions and ISAs are both vital tools for securing your financial future.

But when you’re deciding where to put your money, it’s important to remember there are key differences between the two…



Pensions and ISAs both offer different tax benefits.

When you put money into a pension, you receive tax relief on your contributions, while any interest, dividends, or capital gains generated within an ISA are tax-free.



You can withdraw money from an ISA at any time without being penalised. By contrast, a pension is a long-term investment that you can’t access until you’re 55

Pensions can be low maintenance

Pensions can be managed by providers, so you can take a very hands-off approach if you want.

Employers will top up your workplace pension

You’re the sole contributor to an ISA, so the onus is on you to put money into this account.

It’s very different with a workplace pension, as your employer is legally required to make a contribution to the pot.

How do you choose?

Deciding where and how to invest your money depends on many different factors unique to you, such as:


Your age

Younger people will have longer to save for retirement and may therefore benefit more than older individuals from the flexibility and liquidity that ISAs offer.

Your lifestyle goals

Common ambitions such as buying a house or paying school fees are relatively short-term financial objectives, so it’s well worth taking advantage of the accessibility and flexibility that ISAs offer.

But if you have more long-term priorities, such as building a nest-egg for the future, pensions might be a more attractive option.


Your tolerance to risk

ISAs allow for a wide range of investment choices, including high-risk assets, so if you’re comfortable with higher levels of risk, ISAs may be a suitable option for you.

But if you’re more risk-averse and want to limit your exposure to market fluctuations, pensions can offer a much more stable income stream in retirement.

The best option is to include both ISAs and pensions in your financial plan, so you can enjoy tax efficiency and flexibility at the same time.

Although there will always be a need to save for short-term needs, it’s always best in the long run to maximise your pension contributions as much as you can.

But make sure it’s affordable so you’re able to get the most out of any employer matching or enhanced employer contributions that you may qualify for by paying more in yourself.

Check with your employer to see what’s on offer.

Take charge of your retirement planning with the Creative Pension Trust Member Portal.

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