dealtn wrote:Please enlighten us with a worked example.
This comes up so regularly that it is untrue. Yes the pension is better, in theory.
Here is an example.
https://www.ii.co.uk/analysis-commentar ... l-ii510812
HOWEVER, it's quite meaningless.
It's simply an example of the mathematical results and takes no account of circumstances.
Indeed they start by saying so.
Looking solely at the tax position, we asked financial adviser Flying Colours to crunch the numbers, comparing the outcomes from saving the same amount for 40 years into a pension, an Isa, and an ordinary savings account without any tax breaks. The calculation was based on all investments growing by 6% a year, with dividend income of 3%.
They go on to further explain why such a calculation is not relivent.
Personally, I would not assume that the situation in 40 years time would be the same. It certainly hasn't in the 35 years that I've been contributing to a pension. Indeed SIPP's didn't exist back then and neither did ISA's.
If I were to advise my children, it would be do both, with the bulk into the ISA until older.