Personal pensions trump Isas for retirement saving

Supported by
Scottish Widows
Supported by
Scottish Widows
Personal pensions trump Isas for retirement saving

More than half of people would save into a personal pension to accumulate savings for their retirement, making this the most popular retirement product, according to the latest FTAdviser poll.

The poll asked financial advisers which savings vehicle clients were most likely to use to accumulate savings for retirement. 

Personal pensions were the most popular as 51 per cent of advisers said clients most commonly used this product to save for later life. 

Almost one third (30 per cent) of advisers said their clients used company pension plans, while 19 per cent said they would use a stocks and shares Isa for their clients' retirement savings. 

None of the advisers who voted in the poll, which was carried by FTAdviser in association with Scottish Widows, said their clients would use a cash Isa to accumulate retirement savings. 

Steve Webb, director of policy at Royal London and former pensions minister, said: "Automatic enrolment and the benefits of an employer contribution plus pension tax relief make workplace pension saving very attractive, but some individuals will be looking for other ways to invest if they are self-employed or have hit their tax relief limits."


Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "A company pension plan is the first port of call for retirement savings because it comes with valuable employer contributions as well as tax relief. 

"However, advisory clients are probably more likely than the population at large to use personal pensions as well because they have maxed out on employer contributions."

Alex Shaw, director of Progeny Wealth, said he was not surprised by the survey results.

He said: "Companies will often set up a cheap and cheerful scheme to comply with auto-enrolment rules but many employees will then pay in lump sums to a private scheme alongside this. This gives a greater degree of personal control, primarily around fund choice."

But he added the best retirement planning strategies would make good use of both Isas and pension rules.

"Pensions offer fantastic tax breaks, particularly for higher and additional rate tax payers but people need accessibility too. Not everyone, particularly those who are early in their financial journey, can afford to tie up vast amounts of money in pensions and therefore Isas will be more appealing," he said.

But Dennis Hall, financial planner at Yellowtail Financial Planning, said: "Constant tinkering with pensions by government gives Isas a ‘certainty’ edge. 

"The Isa ‘brand’ is more trusted than the pension ‘brand’."