Just started working and need to get straight some stuff about saving for eventual retirement, Besides the basic state pension, it appears to be required to also have a second source of savings for retirements--it can be a second state pension, company scheme or a private pension plan--my choice is the latter, more precisely SIPP. Are you allowed to put your pension savings in an ISA instead of an SIPP? I understand that either an ISA or an SIPP will let you manage your own investments if you wish, and they differ mainly in how they're treated for taxation. Am I correct that:
-with an SIPP, the *total* sum will be taxed (at your rate when you
retire) when you draw on it for your pension, and 25% of it will be tax
-with an ISA, all money paid in will already have been taxed at your
current income tax rate; and all interest earned on that sum afterwards
are tax free?
I think I just got it clear but I'm not sure. In any case if it's
required to have an SIPP that means I must save at least some in an
SIPP? Otherwise to me an ISA seems simpler.
- posted 13 years ago