Using a Stocks and Shares ISA Could Have Advantages for the Pension Fund

The stocks and shares ISA is arguably the lesser known brother to the cash ISA, which were heavily featured in the media due to its tax free saving offerings.  The stocks and shares ISA is a different animal to the cash ISA as the former handles investment in the stocks and shares market.

There introduction gave investors favourable tax rules which were by and large welcomed by the UK investor community.  The tax rules which were warmly received were:

• Dividends are not subject to additional tax
• Capital Gains are not taxed
• Bonds interest is not taxed       
• Income, capital gains, or trades are not considered taxable income so they do not have to be reported to HMRC.

Some, who were looking at their pension pot with a glass half empty view point, saw this as an opportunity to provide additional income for the twilight years.  They were especially popular with the twilight year community who had incomes around £22,900 mark as they did not lose any personal allowances through using the stocks and shares ISA.

The fragile nature of pensions in the UK has meant that many investors are now looking for ways to top up the pension pot.  The varying nature of the stock market has left many pensions to be of poor value and subsequently the beneficiaries of these pensions have a poor quality of life.  Though stocks and shares ISAs are also based on stock market performance, not placing eggs in the same basket is often a wise move where financial investment is concerned. 

If all the cash is with the pension and the stock market falls or worse crashes, then that person’s retirement is looking bleak.  If the money is spread around, then the chances are if one part fails the other may offset it somewhat.  Of course a person could be lucky and find all their investments smell of roses, rather than wiltering carnations from the petrol station.

Often financial advisors and banks are engaged by people to act on their behalf where financial investment is concerned.  Though this seems like a good move on the surface, it often leads to a client paying too much for services.   Many decisions of the financial investment nature, should be made by the client.  Often it is a question of common sense and there is no need to pay professional his or her fees to do make a straight forward decision.  There are financial companies which acknowledge this, and are happy to step in only when they are needed.  They tend to be less commission hungry to boot.

If you are looking to use a stocks and shares ISA, this kind of company is one to look for.