Investments  

Isa warning from Aegon: be wise with your income

Isa warning from Aegon: be wise with your income

Advisers should take a fresh look at how pensions and Isas compare, Steven Cameron has said, to ensure that clients get the best possible income in retirement.

The regulatory strategy director for Aegon UK said that although there were many positive changes to pensions, which have made them more flexible and attractive, the same was also true of Isas.

He said: “People must consider how Isas can be used to best effect. The rules around them have changed and not only can people put more into them, they can also hold their entire allowance in cash or investments.”

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There is also more flexibility being introduced with the Budget, allowing people to withdraw money and reinvest within a tax year, without incurring a tax event, while the government announced earlier this year that surviving spouses can now receive an additional Isa allowance in that year, equal to the deceased’s Isa holdings.

Mr Cameron added: “It is certainly possible to emphasise the importance of taking a fresh look at how pensions and Isas compare in the new environment. And this should be a priority in any retirement planning strategy.”

Adviser View

Chris Williams, founder of Bristol-based Wealth Horizon, said investors could be baffled by the range of Isa choices available and would need advice about how to invest to get the best income.

He said: “Almost £5bn of investors’ hard-earned savings could find its way into funds that go on to underperform their benchmarks this Isa season.

“Investors baffled by a deluge of marketing material are consistently buying the most popular funds in the UK only to see them underperform.”